Correlation Between Northland Power and Innergex Renewable
Can any of the company-specific risk be diversified away by investing in both Northland Power and Innergex 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 Innergex 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 Innergex Renewable Energy, you can compare the effects of market volatilities on Northland Power and Innergex 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 Innergex Renewable. Check out your portfolio center. Please also check ongoing floating volatility patterns of Northland Power and Innergex Renewable.
Diversification Opportunities for Northland Power and Innergex Renewable
0.9 | Correlation Coefficient |
Almost no diversification
The 3 months correlation between Northland and Innergex is 0.9. Overlapping area represents the amount of risk that can be diversified away by holding Northland Power and Innergex Renewable Energy in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Innergex Renewable Energy 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 Innergex Renewable. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Innergex Renewable Energy has no effect on the direction of Northland Power i.e., Northland Power and Innergex Renewable go up and down completely randomly.
Pair Corralation between Northland Power and Innergex Renewable
Assuming the 90 days trading horizon Northland Power is expected to under-perform the Innergex Renewable. But the stock apears to be less risky and, when comparing its historical volatility, Northland Power is 1.32 times less risky than Innergex Renewable. The stock trades about -0.04 of its potential returns per unit of risk. The Innergex Renewable Energy is currently generating about 0.0 of returns per unit of risk over similar time horizon. If you would invest 851.00 in Innergex Renewable Energy on October 24, 2024 and sell it today you would lose (68.00) from holding Innergex Renewable Energy or give up 7.99% of portfolio value over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Very Strong |
| Accuracy | 100.0% |
| Values | Daily Returns |
Northland Power vs. Innergex Renewable Energy
Performance |
| Timeline |
| Northland Power |
| Innergex Renewable Energy |
Northland Power and Innergex Renewable Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Northland Power and Innergex Renewable
The main advantage of trading using opposite Northland Power and Innergex Renewable positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Northland Power position performs unexpectedly, Innergex 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 Innergex Renewable will offset losses from the drop in Innergex 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 |
| Innergex Renewable vs. Boralex | Innergex Renewable vs. Northland Power | Innergex Renewable vs. Capital Power | Innergex Renewable vs. Brookfield Renewable Partners |
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 Content Syndication module to quickly integrate customizable finance content to your own investment portal.
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