Correlation Between Northland Power and Fusion Fuel
Can any of the company-specific risk be diversified away by investing in both Northland Power and Fusion Fuel 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 Fusion Fuel into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Northland Power and Fusion Fuel Green, you can compare the effects of market volatilities on Northland Power and Fusion Fuel 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 Fusion Fuel. Check out your portfolio center. Please also check ongoing floating volatility patterns of Northland Power and Fusion Fuel.
Diversification Opportunities for Northland Power and Fusion Fuel
0.26 | Correlation Coefficient |
Modest diversification
The 3 months correlation between Northland and Fusion is 0.26. Overlapping area represents the amount of risk that can be diversified away by holding Northland Power and Fusion Fuel Green in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Fusion Fuel Green 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 Fusion Fuel. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Fusion Fuel Green has no effect on the direction of Northland Power i.e., Northland Power and Fusion Fuel go up and down completely randomly.
Pair Corralation between Northland Power and Fusion Fuel
Assuming the 90 days horizon Northland Power is expected to generate 0.12 times more return on investment than Fusion Fuel. However, Northland Power is 8.55 times less risky than Fusion Fuel. It trades about -0.32 of its potential returns per unit of risk. Fusion Fuel Green is currently generating about -0.08 per unit of risk. If you would invest 1,324 in Northland Power on November 5, 2024 and sell it today you would lose (157.00) from holding Northland Power or give up 11.86% of portfolio value over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Very Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
Northland Power vs. Fusion Fuel Green
Performance |
| Timeline |
| Northland Power |
| Fusion Fuel Green |
Northland Power and Fusion Fuel Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Northland Power and Fusion Fuel
The main advantage of trading using opposite Northland Power and Fusion Fuel positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Northland Power position performs unexpectedly, Fusion Fuel 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 Fusion Fuel will offset losses from the drop in Fusion Fuel's long position.| Northland Power vs. Kontrol Technologies Corp | Northland Power vs. PwrCor Inc | Northland Power vs. 808 Renewable Energy | Northland Power vs. Boralex |
| Fusion Fuel vs. Fusion Fuel Green | Fusion Fuel vs. Advent Technologies Holdings | Fusion Fuel vs. Eos Energy Enterprises | Fusion Fuel vs. CuriosityStream |
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 Fundamentals Comparison module to compare fundamentals across multiple equities to find investing opportunities.
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