Correlation Between Innergex Renewable and Nextera Energy
Can any of the company-specific risk be diversified away by investing in both Innergex Renewable and Nextera Energy 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 Nextera Energy 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 Nextera Energy Partners, you can compare the effects of market volatilities on Innergex Renewable and Nextera Energy 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 Nextera Energy. Check out your portfolio center. Please also check ongoing floating volatility patterns of Innergex Renewable and Nextera Energy.
Diversification Opportunities for Innergex Renewable and Nextera Energy
0.76 | Correlation Coefficient |
Poor diversification
The 3 months correlation between Innergex and Nextera is 0.76. Overlapping area represents the amount of risk that can be diversified away by holding Innergex Renewable Energy and Nextera Energy Partners in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Nextera Energy Partners 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 Nextera Energy. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Nextera Energy Partners has no effect on the direction of Innergex Renewable i.e., Innergex Renewable and Nextera Energy go up and down completely randomly.
Pair Corralation between Innergex Renewable and Nextera Energy
Assuming the 90 days horizon Innergex Renewable Energy is expected to generate 0.57 times more return on investment than Nextera Energy. However, Innergex Renewable Energy is 1.75 times less risky than Nextera Energy. It trades about -0.34 of its potential returns per unit of risk. Nextera Energy Partners is currently generating about -0.27 per unit of risk. If you would invest 703.00 in Innergex Renewable Energy on August 24, 2024 and sell it today you would lose (93.00) from holding Innergex Renewable Energy or give up 13.23% of portfolio value over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Significant |
| Accuracy | 100.0% |
| Values | Daily Returns |
Innergex Renewable Energy vs. Nextera Energy Partners
Performance |
| Timeline |
| Innergex Renewable Energy |
| Nextera Energy Partners |
Innergex Renewable and Nextera Energy Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Innergex Renewable and Nextera Energy
The main advantage of trading using opposite Innergex Renewable and Nextera Energy positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Innergex Renewable position performs unexpectedly, Nextera Energy 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 Nextera Energy will offset losses from the drop in Nextera Energy's long position.| Innergex Renewable vs. Orsted AS | Innergex Renewable vs. Clearway Energy | Innergex Renewable vs. Fusion Fuel Green | Innergex Renewable vs. Powertap Hydrogen Capital |
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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 Competition Analyzer module to analyze and compare many basic indicators for a group of related or unrelated entities.
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