Correlation Between Northland Power and Brookfield Renewable
Can any of the company-specific risk be diversified away by investing in both Northland Power and Brookfield 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 Northland Power and Brookfield Renewable into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Northland Power and Brookfield Renewable Partners, you can compare the effects of market volatilities on Northland Power and Brookfield 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 Northland Power with a short position of Brookfield Renewable. Check out your portfolio center. Please also check ongoing floating volatility patterns of Northland Power and Brookfield Renewable.
Diversification Opportunities for Northland Power and Brookfield Renewable
0.52 | Correlation Coefficient |
Very weak diversification
The 3 months correlation between Northland and Brookfield is 0.52. Overlapping area represents the amount of risk that can be diversified away by holding Northland Power and Brookfield Renewable Partners in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Brookfield Renewable and Northland Power 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 Northland Power are associated (or correlated) with Brookfield Renewable. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Brookfield Renewable has no effect on the direction of Northland Power i.e., Northland Power and Brookfield Renewable go up and down completely randomly.
Pair Corralation between Northland Power and Brookfield Renewable
Assuming the 90 days trading horizon Northland Power is expected to under-perform the Brookfield Renewable. But the stock apears to be less risky and, when comparing its historical volatility, Northland Power is 1.02 times less risky than Brookfield Renewable. The stock trades about -0.21 of its potential returns per unit of risk. The Brookfield Renewable Partners is currently generating about -0.18 of returns per unit of risk over similar time horizon. If you would invest 3,845 in Brookfield Renewable Partners on August 25, 2024 and sell it today you would lose (326.00) from holding Brookfield Renewable Partners or give up 8.48% of portfolio value over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
Northland Power vs. Brookfield Renewable Partners
Performance |
| Timeline |
| Northland Power |
| Brookfield Renewable |
Northland Power and Brookfield Renewable Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Northland Power and Brookfield Renewable
The main advantage of trading using opposite Northland Power and Brookfield Renewable positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Northland Power position performs unexpectedly, Brookfield 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 Brookfield Renewable will offset losses from the drop in Brookfield Renewable's long position.| Northland Power vs. Brookfield Renewable Partners | Northland Power vs. Algonquin Power Utilities | Northland Power vs. Innergex Renewable Energy | Northland Power vs. Capital Power |
| Brookfield Renewable vs. Brookfield Infrastructure Partners | Brookfield Renewable vs. Algonquin Power Utilities | Brookfield Renewable vs. Northland Power | Brookfield Renewable vs. Fortis Inc |
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 Piotroski F Score module to get Piotroski F Score based on the binary analysis strategy of nine different fundamentals.
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