Correlation Between Ninepoint Energy and Sustainable Innovation

Can any of the company-specific risk be diversified away by investing in both Ninepoint Energy and Sustainable Innovation 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 Ninepoint Energy and Sustainable Innovation into the same portfolio, which is an essential part of the fundamental portfolio management process.

By analyzing existing cross correlation between Ninepoint Energy and Sustainable Innovation Health, you can compare the effects of market volatilities on Ninepoint Energy and Sustainable Innovation 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 Ninepoint Energy with a short position of Sustainable Innovation. Check out your portfolio center. Please also check ongoing floating volatility patterns of Ninepoint Energy and Sustainable Innovation.

Diversification Opportunities for Ninepoint Energy and Sustainable Innovation

-0.78

Correlation Coefficient

Ninepoint Energy  Sustainable Innovation

Pay attention - limited upside

The 3 months correlation between Ninepoint and Sustainable is -0.78. Overlapping area represents the amount of risk that can be diversified away by holding Ninepoint Energy and Sustainable Innovation Health in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Sustainable Innovation and Ninepoint Energy 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 Ninepoint Energy are associated (or correlated) with Sustainable Innovation. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Sustainable Innovation has no effect on the direction of Ninepoint Energy i.e., Ninepoint Energy and Sustainable Innovation go up and down completely randomly.

Pair Corralation between Ninepoint Energy and Sustainable Innovation

Assuming the 90 days trading horizon Ninepoint Energy is expected to under-perform the Sustainable Innovation. In addition to that, Ninepoint Energy is 1.77 times more volatile than Sustainable Innovation Health. It trades about -0.04 of its total potential returns per unit of risk. Sustainable Innovation Health is currently generating about 0.08 per unit of volatility. If you would invest  1,340  in Sustainable Innovation Health on October 27, 2024 and sell it today you would earn a total of  60.00  from holding Sustainable Innovation Health or generate 4.48% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Against
Strength	Weak
Accuracy	100.0%
Values	Daily Returns

Ninepoint Energy  vs.  Sustainable Innovation Health

Ninepoint Energy

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Ninepoint Energy has generated negative risk-adjusted returns adding no value to fund investors. Despite somewhat strong basic indicators, Ninepoint Energy is not utilizing all of its potentials. The current stock price disturbance, may contribute to short-term losses for the investors.

Sustainable Innovation

Risk-Adjusted Performance

6 of 100

Modest

Compared to the overall equity markets, risk-adjusted returns on investments in Sustainable Innovation Health are ranked lower than 6 (%) of all funds and portfolios of funds over the last 90 days. Despite somewhat strong technical indicators, Sustainable Innovation is not utilizing all of its potentials. The current stock price disturbance, may contribute to short-term losses for the investors.

Pair Trading with Ninepoint Energy and Sustainable Innovation

The main advantage of trading using opposite Ninepoint Energy and Sustainable Innovation positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Ninepoint Energy position performs unexpectedly, Sustainable Innovation 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 Sustainable Innovation will offset losses from the drop in Sustainable Innovation's long position.

The idea behind Ninepoint Energy and Sustainable Innovation Health 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.

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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 AI Portfolio Architect module to use AI to generate optimal portfolios and find profitable investment opportunities.