Correlation Between Northland Power and Energy Of
Can any of the company-specific risk be diversified away by investing in both Northland Power and Energy Of 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 Energy Of into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Northland Power and Energy of Minas, you can compare the effects of market volatilities on Northland Power and Energy Of 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 Energy Of. Check out your portfolio center. Please also check ongoing floating volatility patterns of Northland Power and Energy Of.
Diversification Opportunities for Northland Power and Energy Of
0.21 | Correlation Coefficient |
Modest diversification
The 3 months correlation between Northland and Energy is 0.21. Overlapping area represents the amount of risk that can be diversified away by holding Northland Power and Energy of Minas in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Energy of Minas 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 Energy Of. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Energy of Minas has no effect on the direction of Northland Power i.e., Northland Power and Energy Of go up and down completely randomly.
Pair Corralation between Northland Power and Energy Of
Assuming the 90 days horizon Northland Power is expected to under-perform the Energy Of. But the pink sheet apears to be less risky and, when comparing its historical volatility, Northland Power is 1.3 times less risky than Energy Of. The pink sheet trades about -0.01 of its potential returns per unit of risk. The Energy of Minas is currently generating about 0.03 of returns per unit of risk over similar time horizon. If you would invest 212.00 in Energy of Minas on September 4, 2024 and sell it today you would earn a total of 24.00 from holding Energy of Minas or generate 11.32% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Very Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
Northland Power vs. Energy of Minas
Performance |
| Timeline |
| Northland Power |
| Energy of Minas |
Northland Power and Energy Of Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Northland Power and Energy Of
The main advantage of trading using opposite Northland Power and Energy Of positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Northland Power position performs unexpectedly, Energy Of 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 Energy Of will offset losses from the drop in Energy Of's long position.| Northland Power vs. Energy of Minas | Northland Power vs. The AES | Northland Power vs. Sempra Energy | Northland Power vs. Iberdrola SA |
| Energy Of vs. Atco | Energy Of vs. AuraSource | Energy Of vs. Canadian Utilities Limited | Energy Of vs. Engie SA ADR |
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 Technical Analysis module to check basic technical indicators and analysis based on most latest market data.
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