Correlation Between Northland Power and Clearway Energy
Can any of the company-specific risk be diversified away by investing in both Northland Power and Clearway 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 Northland Power and Clearway Energy into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Northland Power and Clearway Energy, you can compare the effects of market volatilities on Northland Power and Clearway 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 Northland Power with a short position of Clearway Energy. Check out your portfolio center. Please also check ongoing floating volatility patterns of Northland Power and Clearway Energy.
Diversification Opportunities for Northland Power and Clearway Energy
0.41 | Correlation Coefficient |
Very weak diversification
The 3 months correlation between Northland and Clearway is 0.41. Overlapping area represents the amount of risk that can be diversified away by holding Northland Power and Clearway Energy in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Clearway 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 Clearway Energy. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Clearway Energy has no effect on the direction of Northland Power i.e., Northland Power and Clearway Energy go up and down completely randomly.
Pair Corralation between Northland Power and Clearway Energy
Assuming the 90 days horizon Northland Power is expected to under-perform the Clearway Energy. But the pink sheet apears to be less risky and, when comparing its historical volatility, Northland Power is 1.05 times less risky than Clearway Energy. The pink sheet trades about -0.32 of its potential returns per unit of risk. The Clearway Energy is currently generating about -0.01 of returns per unit of risk over similar time horizon. If you would invest 2,471 in Clearway Energy on November 5, 2024 and sell it today you would lose (18.00) from holding Clearway Energy or give up 0.73% 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. Clearway Energy
Performance |
| Timeline |
| Northland Power |
| Clearway Energy |
Northland Power and Clearway Energy Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Northland Power and Clearway Energy
The main advantage of trading using opposite Northland Power and Clearway Energy positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Northland Power position performs unexpectedly, Clearway 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 Clearway Energy will offset losses from the drop in Clearway Energy's long position.| Northland Power vs. Kontrol Technologies Corp | Northland Power vs. PwrCor Inc | Northland Power vs. 808 Renewable Energy | Northland Power vs. Boralex |
| Clearway Energy vs. Brookfield Renewable Corp | Clearway Energy vs. Nextera Energy Partners | Clearway Energy vs. Brookfield Renewable Partners | Clearway Energy vs. Clearway Energy Class |
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 Instant Ratings module to determine any equity ratings based on digital recommendations. Macroaxis instant equity ratings are based on combination of fundamental analysis and risk-adjusted market performance.
Other Complementary Tools
| Portfolio Center All portfolio management and optimization tools to improve performance of your portfolios | |
| Share Portfolio Track or share privately all of your investments from the convenience of any device | |
| USA ETFs Find actively traded Exchange Traded Funds (ETF) in USA | |
| Premium Stories Follow Macroaxis premium stories from verified contributors across different equity types, categories and coverage scope | |
| Technical Analysis Check basic technical indicators and analysis based on most latest market data |