Correlation Between Iberdrola and Innergex Renewable
Can any of the company-specific risk be diversified away by investing in both Iberdrola and Innergex Renewable 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 Iberdrola and Innergex Renewable into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Iberdrola SA and Innergex Renewable Energy, you can compare the effects of market volatilities on Iberdrola and Innergex Renewable 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 Iberdrola with a short position of Innergex Renewable. Check out your portfolio center. Please also check ongoing floating volatility patterns of Iberdrola and Innergex Renewable.
Diversification Opportunities for Iberdrola and Innergex Renewable
0.76 | Correlation Coefficient |
Poor diversification
The 3 months correlation between Iberdrola and Innergex is 0.76. Overlapping area represents the amount of risk that can be diversified away by holding Iberdrola SA and Innergex Renewable Energy in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Innergex Renewable Energy and Iberdrola 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 Iberdrola SA are associated (or correlated) with Innergex Renewable. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Innergex Renewable Energy has no effect on the direction of Iberdrola i.e., Iberdrola and Innergex Renewable go up and down completely randomly.
Pair Corralation between Iberdrola and Innergex Renewable
Assuming the 90 days horizon Iberdrola SA is expected to generate 0.36 times more return on investment than Innergex Renewable. However, Iberdrola SA is 2.77 times less risky than Innergex Renewable. It trades about 0.06 of its potential returns per unit of risk. Innergex Renewable Energy is currently generating about -0.02 per unit of risk. If you would invest 1,045 in Iberdrola SA on September 5, 2024 and sell it today you would earn a total of 382.00 from holding Iberdrola SA or generate 36.56% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Significant |
| Accuracy | 97.98% |
| Values | Daily Returns |
Iberdrola SA vs. Innergex Renewable Energy
Performance |
| Timeline |
| Iberdrola SA |
| Innergex Renewable Energy |
Iberdrola and Innergex Renewable Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Iberdrola and Innergex Renewable
The main advantage of trading using opposite Iberdrola and Innergex Renewable positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Iberdrola position performs unexpectedly, Innergex Renewable 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 Innergex Renewable will offset losses from the drop in Innergex Renewable's long position.| Iberdrola vs. RWE AG PK | Iberdrola vs. Iberdrola SA | Iberdrola vs. Canadian Utilities Limited | Iberdrola vs. Aquagold International |
| Innergex Renewable vs. Orsted AS | Innergex Renewable vs. Clearway Energy | Innergex Renewable vs. Fusion Fuel Green | Innergex Renewable vs. Powertap Hydrogen Capital |
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 Investing Opportunities module to build portfolios using our predefined set of ideas and optimize them against your investing preferences.
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