Correlation Between Innergex Renewable and Maxim Power
Can any of the company-specific risk be diversified away by investing in both Innergex Renewable and Maxim 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 Innergex Renewable and Maxim Power into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Innergex Renewable Energy and Maxim Power Corp, you can compare the effects of market volatilities on Innergex Renewable and Maxim 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 Innergex Renewable with a short position of Maxim Power. Check out your portfolio center. Please also check ongoing floating volatility patterns of Innergex Renewable and Maxim Power.
Diversification Opportunities for Innergex Renewable and Maxim Power
0.79 | Correlation Coefficient |
Poor diversification
The 3 months correlation between Innergex and Maxim is 0.79. Overlapping area represents the amount of risk that can be diversified away by holding Innergex Renewable Energy and Maxim Power Corp in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Maxim Power Corp and Innergex Renewable 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 Innergex Renewable Energy are associated (or correlated) with Maxim Power. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Maxim Power Corp has no effect on the direction of Innergex Renewable i.e., Innergex Renewable and Maxim Power go up and down completely randomly.
Pair Corralation between Innergex Renewable and Maxim Power
Assuming the 90 days trading horizon Innergex Renewable is expected to generate 6.04 times less return on investment than Maxim Power. But when comparing it to its historical volatility, Innergex Renewable Energy is 3.34 times less risky than Maxim Power. It trades about 0.13 of its potential returns per unit of risk. Maxim Power Corp is currently generating about 0.23 of returns per unit of risk over similar time horizon. If you would invest 530.00 in Maxim Power Corp on October 25, 2024 and sell it today you would earn a total of 71.00 from holding Maxim Power Corp or generate 13.4% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Significant |
| Accuracy | 95.0% |
| Values | Daily Returns |
Innergex Renewable Energy vs. Maxim Power Corp
Performance |
| Timeline |
| Innergex Renewable Energy |
| Maxim Power Corp |
Innergex Renewable and Maxim Power Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Innergex Renewable and Maxim Power
The main advantage of trading using opposite Innergex Renewable and Maxim Power positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Innergex Renewable position performs unexpectedly, Maxim 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 Maxim Power will offset losses from the drop in Maxim Power's long position.| Innergex Renewable vs. Renoworks Software | Innergex Renewable vs. Sparx Technology | Innergex Renewable vs. TUT Fitness Group | Innergex Renewable vs. TGS Esports |
| Maxim Power vs. Caldwell Partners International | Maxim Power vs. Mccoy Global | Maxim Power vs. Pulse Seismic | Maxim Power vs. Currency Exchange International |
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 Performance Analysis module to check effects of mean-variance optimization against your current asset allocation.
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