Correlation Between Fusion Fuel and Northland Power
Can any of the company-specific risk be diversified away by investing in both Fusion Fuel and Northland Power at the same time? Although using a correlation coefficient on its own may not help to predict future stock returns, this module helps to understand the diversifiable risk of combining Fusion Fuel and Northland Power into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Fusion Fuel Green and Northland Power, you can compare the effects of market volatilities on Fusion Fuel and Northland Power and check how they will diversify away market risk if combined in the same portfolio for a given time horizon. You can also utilize pair trading strategies of matching a long position in Fusion Fuel with a short position of Northland Power. Check out your portfolio center. Please also check ongoing floating volatility patterns of Fusion Fuel and Northland Power.
Diversification Opportunities for Fusion Fuel and Northland Power
0.44 | Correlation Coefficient |
Very weak diversification
The 3 months correlation between Fusion and Northland is 0.44. Overlapping area represents the amount of risk that can be diversified away by holding Fusion Fuel Green and Northland Power in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Northland Power and Fusion Fuel is a relative statistical measure of the degree to which these equity instruments tend to move together. The correlation coefficient measures the extent to which returns on Fusion Fuel Green are associated (or correlated) with Northland Power. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Northland Power has no effect on the direction of Fusion Fuel i.e., Fusion Fuel and Northland Power go up and down completely randomly.
Pair Corralation between Fusion Fuel and Northland Power
Assuming the 90 days horizon Fusion Fuel Green is expected to generate 11.96 times more return on investment than Northland Power. However, Fusion Fuel is 11.96 times more volatile than Northland Power. It trades about 0.09 of its potential returns per unit of risk. Northland Power is currently generating about -0.17 per unit of risk. If you would invest 3.30 in Fusion Fuel Green on October 26, 2024 and sell it today you would lose (0.99) from holding Fusion Fuel Green or give up 30.0% of portfolio value over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
Fusion Fuel Green vs. Northland Power
Performance |
| Timeline |
| Fusion Fuel Green |
| Northland Power |
Fusion Fuel and Northland Power Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Fusion Fuel and Northland Power
The main advantage of trading using opposite Fusion Fuel and Northland Power positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Fusion Fuel position performs unexpectedly, Northland Power can make up some of the losses. Pair trading also minimizes risk from directional movements in the market. For example, if an entire industry or sector drops because of unexpected headlines, the short position in Northland Power will offset losses from the drop in Northland Power's long position.| Fusion Fuel vs. Fusion Fuel Green | Fusion Fuel vs. Advent Technologies Holdings | Fusion Fuel vs. Eos Energy Enterprises | Fusion Fuel vs. CuriosityStream |
| Northland Power vs. Tidewater Renewables | Northland Power vs. Renew Energy Global | Northland Power vs. Clearway Energy | Northland Power vs. Brookfield Renewable Partners |
Check out your portfolio center.Note that this page's information should be used as a complementary analysis to find the right mix of equity instruments to add to your existing portfolios or create a brand new portfolio. You can also try the Bonds Directory module to find actively traded corporate debentures issued by US companies.
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