Correlation Between Northland Power and Advent Technologies
Can any of the company-specific risk be diversified away by investing in both Northland Power and Advent Technologies 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 Advent Technologies into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Northland Power and Advent Technologies Holdings, you can compare the effects of market volatilities on Northland Power and Advent Technologies 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 Advent Technologies. Check out your portfolio center. Please also check ongoing floating volatility patterns of Northland Power and Advent Technologies.
Diversification Opportunities for Northland Power and Advent Technologies
-0.66 | Correlation Coefficient |
Excellent diversification
The 3 months correlation between Northland and Advent is -0.66. Overlapping area represents the amount of risk that can be diversified away by holding Northland Power and Advent Technologies Holdings in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Advent Technologies 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 Advent Technologies. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Advent Technologies has no effect on the direction of Northland Power i.e., Northland Power and Advent Technologies go up and down completely randomly.
Pair Corralation between Northland Power and Advent Technologies
Assuming the 90 days horizon Northland Power is expected to under-perform the Advent Technologies. But the pink sheet apears to be less risky and, when comparing its historical volatility, Northland Power is 4.44 times less risky than Advent Technologies. The pink sheet trades about -0.04 of its potential returns per unit of risk. The Advent Technologies Holdings is currently generating about -0.01 of returns per unit of risk over similar time horizon. If you would invest 2,199 in Advent Technologies Holdings on August 31, 2024 and sell it today you would lose (1,709) from holding Advent Technologies Holdings or give up 77.72% of portfolio value over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Weak |
| Accuracy | 99.73% |
| Values | Daily Returns |
Northland Power vs. Advent Technologies Holdings
Performance |
| Timeline |
| Northland Power |
| Advent Technologies |
Northland Power and Advent Technologies Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Northland Power and Advent Technologies
The main advantage of trading using opposite Northland Power and Advent Technologies positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Northland Power position performs unexpectedly, Advent Technologies 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 Advent Technologies will offset losses from the drop in Advent Technologies' long position.| Northland Power vs. Tidewater Renewables | Northland Power vs. Renew Energy Global | Northland Power vs. Clearway Energy | Northland Power vs. Brookfield Renewable Partners |
| Advent Technologies vs. Fluence Energy | Advent Technologies vs. Altus Power | Advent Technologies vs. Energy Vault Holdings | Advent Technologies vs. Enlight Renewable Energy |
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 Sectors module to list of equity sectors categorizing publicly traded companies based on their primary business activities.
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