Correlation Between Transalta and Innergex Renewable
Can any of the company-specific risk be diversified away by investing in both Transalta and Innergex Renewable 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 Transalta and Innergex Renewable into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Transalta A Cum and Innergex Renewable Energy, you can compare the effects of market volatilities on Transalta and Innergex Renewable 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 Transalta with a short position of Innergex Renewable. Check out your portfolio center. Please also check ongoing floating volatility patterns of Transalta and Innergex Renewable.
Diversification Opportunities for Transalta and Innergex Renewable
0.89 | Correlation Coefficient |
Very poor diversification
The 3 months correlation between Transalta and Innergex is 0.89. Overlapping area represents the amount of risk that can be diversified away by holding Transalta A Cum and Innergex Renewable Energy in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Innergex Renewable Energy and Transalta 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 Transalta A Cum are associated (or correlated) with Innergex Renewable. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Innergex Renewable Energy has no effect on the direction of Transalta i.e., Transalta and Innergex Renewable go up and down completely randomly.
Pair Corralation between Transalta and Innergex Renewable
Assuming the 90 days trading horizon Transalta A Cum is expected to generate 0.38 times more return on investment than Innergex Renewable. However, Transalta A Cum is 2.66 times less risky than Innergex Renewable. It trades about 0.41 of its potential returns per unit of risk. Innergex Renewable Energy is currently generating about 0.13 per unit of risk. If you would invest 1,542 in Transalta A Cum on October 25, 2024 and sell it today you would earn a total of 44.00 from holding Transalta A Cum or generate 2.85% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Strong |
| Accuracy | 100.0% |
| Values | Daily Returns |
Transalta A Cum vs. Innergex Renewable Energy
Performance |
| Timeline |
| Transalta A Cum |
| Innergex Renewable Energy |
Transalta and Innergex Renewable Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Transalta and Innergex Renewable
The main advantage of trading using opposite Transalta and Innergex Renewable positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Transalta position performs unexpectedly, Innergex Renewable 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 Innergex Renewable will offset losses from the drop in Innergex Renewable's long position.| Transalta vs. Western Copper and | Transalta vs. Magna Mining | Transalta vs. iSign Media Solutions | Transalta vs. XXIX Metal Corp |
| Innergex Renewable vs. Renoworks Software | Innergex Renewable vs. Sparx Technology | Innergex Renewable vs. TUT Fitness Group | Innergex Renewable vs. TGS Esports |
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 Economic Indicators module to top statistical indicators that provide insights into how an economy is performing.
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