Correlation Between Spark Power and Nextera Energy
Can any of the company-specific risk be diversified away by investing in both Spark Power and Nextera 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 Spark Power and Nextera Energy into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Spark Power Group and Nextera Energy Partners, you can compare the effects of market volatilities on Spark Power and Nextera 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 Spark Power with a short position of Nextera Energy. Check out your portfolio center. Please also check ongoing floating volatility patterns of Spark Power and Nextera Energy.
Diversification Opportunities for Spark Power and Nextera Energy
0.0 | Correlation Coefficient |
Pay attention - limited upside
The 3 months correlation between Spark and Nextera is 0.0. Overlapping area represents the amount of risk that can be diversified away by holding Spark Power Group and Nextera Energy Partners in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Nextera Energy Partners and Spark 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 Spark Power Group are associated (or correlated) with Nextera Energy. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Nextera Energy Partners has no effect on the direction of Spark Power i.e., Spark Power and Nextera Energy go up and down completely randomly.
Pair Corralation between Spark Power and Nextera Energy
If you would invest 27.00 in Spark Power Group on August 24, 2024 and sell it today you would earn a total of 0.00 from holding Spark Power Group or generate 0.0% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Flat |
| Strength | Insignificant |
| Accuracy | 4.35% |
| Values | Daily Returns |
Spark Power Group vs. Nextera Energy Partners
Performance |
| Timeline |
| Spark Power Group |
Risk-Adjusted Performance
0 of 100
Weak | Strong |
Very Weak
| Nextera Energy Partners |
Spark Power and Nextera Energy Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Spark Power and Nextera Energy
The main advantage of trading using opposite Spark Power and Nextera Energy positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Spark Power position performs unexpectedly, Nextera 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 Nextera Energy will offset losses from the drop in Nextera Energy's long position.The idea behind Spark Power Group and Nextera Energy Partners pairs trading is to make the combined position market-neutral, meaning the overall market's direction will not affect its win or loss (or potential downside or upside). This can be achieved by designing a pairs trade with two highly correlated stocks or equities that operate in a similar space or sector, making it possible to obtain profits through simple and relatively low-risk investment.| Nextera Energy vs. Brookfield Renewable Corp | Nextera Energy vs. Algonquin Power Utilities | Nextera Energy vs. Clearway Energy Class | Nextera Energy vs. Atlantica Sustainable Infrastructure |
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 Balance Of Power module to check stock momentum by analyzing Balance Of Power indicator and other technical ratios.
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