Correlation Between Innergex Renewable and Transalta
Can any of the company-specific risk be diversified away by investing in both Innergex Renewable and Transalta 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 Transalta 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 Transalta A Cum, you can compare the effects of market volatilities on Innergex Renewable and Transalta 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 Transalta. Check out your portfolio center. Please also check ongoing floating volatility patterns of Innergex Renewable and Transalta.
Diversification Opportunities for Innergex Renewable and Transalta
0.89 | Correlation Coefficient |
Very poor diversification
The 3 months correlation between Innergex and Transalta is 0.89. Overlapping area represents the amount of risk that can be diversified away by holding Innergex Renewable Energy and Transalta A Cum in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Transalta A Cum 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 Transalta. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Transalta A Cum has no effect on the direction of Innergex Renewable i.e., Innergex Renewable and Transalta go up and down completely randomly.
Pair Corralation between Innergex Renewable and Transalta
Assuming the 90 days trading horizon Innergex Renewable is expected to generate 1.21 times less return on investment than Transalta. In addition to that, Innergex Renewable is 2.66 times more volatile than Transalta A Cum. It trades about 0.13 of its total potential returns per unit of risk. Transalta A Cum is currently generating about 0.41 per unit of volatility. If you would invest 1,542 in Transalta A Cum on October 25, 2024 and sell it today you would earn a total of 44.00 from holding Transalta A Cum or generate 2.85% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Strong |
| Accuracy | 100.0% |
| Values | Daily Returns |
Innergex Renewable Energy vs. Transalta A Cum
Performance |
| Timeline |
| Innergex Renewable Energy |
| Transalta A Cum |
Innergex Renewable and Transalta Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Innergex Renewable and Transalta
The main advantage of trading using opposite Innergex Renewable and Transalta positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Innergex Renewable position performs unexpectedly, Transalta 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 Transalta will offset losses from the drop in Transalta's long position.| Innergex Renewable vs. Renoworks Software | Innergex Renewable vs. Sparx Technology | Innergex Renewable vs. TUT Fitness Group | Innergex Renewable vs. TGS Esports |
| Transalta vs. Western Copper and | Transalta vs. Magna Mining | Transalta vs. iSign Media Solutions | Transalta vs. XXIX Metal Corp |
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 Portfolio Center module to all portfolio management and optimization tools to improve performance of your portfolios.
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