Correlation Between Innergex Renewable and Caribbean Utilities
Can any of the company-specific risk be diversified away by investing in both Innergex Renewable and Caribbean Utilities 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 Caribbean Utilities 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 Caribbean Utilities, you can compare the effects of market volatilities on Innergex Renewable and Caribbean Utilities 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 Caribbean Utilities. Check out your portfolio center. Please also check ongoing floating volatility patterns of Innergex Renewable and Caribbean Utilities.
Diversification Opportunities for Innergex Renewable and Caribbean Utilities
0.64 | Correlation Coefficient |
Poor diversification
The 3 months correlation between Innergex and Caribbean is 0.64. Overlapping area represents the amount of risk that can be diversified away by holding Innergex Renewable Energy and Caribbean Utilities in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Caribbean Utilities 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 Caribbean Utilities. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Caribbean Utilities has no effect on the direction of Innergex Renewable i.e., Innergex Renewable and Caribbean Utilities go up and down completely randomly.
Pair Corralation between Innergex Renewable and Caribbean Utilities
Assuming the 90 days trading horizon Innergex Renewable Energy is expected to under-perform the Caribbean Utilities. In addition to that, Innergex Renewable is 1.58 times more volatile than Caribbean Utilities. It trades about -0.11 of its total potential returns per unit of risk. Caribbean Utilities is currently generating about 0.04 per unit of volatility. If you would invest 1,390 in Caribbean Utilities on September 1, 2024 and sell it today you would earn a total of 10.00 from holding Caribbean Utilities or generate 0.72% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Significant |
| Accuracy | 100.0% |
| Values | Daily Returns |
Innergex Renewable Energy vs. Caribbean Utilities
Performance |
| Timeline |
| Innergex Renewable Energy |
| Caribbean Utilities |
Innergex Renewable and Caribbean Utilities Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Innergex Renewable and Caribbean Utilities
The main advantage of trading using opposite Innergex Renewable and Caribbean Utilities positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Innergex Renewable position performs unexpectedly, Caribbean Utilities 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 Caribbean Utilities will offset losses from the drop in Caribbean Utilities' long position.| Innergex Renewable vs. Boralex | Innergex Renewable vs. Northland Power | Innergex Renewable vs. Capital Power | Innergex Renewable vs. Brookfield Renewable Partners |
| Caribbean Utilities vs. Maxim Power Corp | Caribbean Utilities vs. ATCO | Caribbean Utilities vs. Capstone Infrastructure Corp | Caribbean Utilities vs. Richards Packaging Income |
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 Instant Ratings module to determine any equity ratings based on digital recommendations. Macroaxis instant equity ratings are based on combination of fundamental analysis and risk-adjusted market performance.
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