Correlation Between Boralex and Polaris Infrastructure

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

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

Diversification Opportunities for Boralex and Polaris Infrastructure

-0.27

Correlation Coefficient

Boralex  Polaris Infrastructure

Very good diversification

The 3 months correlation between Boralex and Polaris is -0.27. Overlapping area represents the amount of risk that can be diversified away by holding Boralex and Polaris Infrastructure in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Polaris Infrastructure and Boralex 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 Boralex are associated (or correlated) with Polaris Infrastructure. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Polaris Infrastructure has no effect on the direction of Boralex i.e., Boralex and Polaris Infrastructure go up and down completely randomly.

Pair Corralation between Boralex and Polaris Infrastructure

Assuming the 90 days trading horizon Boralex is expected to generate 1.55 times more return on investment than Polaris Infrastructure. However, Boralex is 1.55 times more volatile than Polaris Infrastructure. It trades about 0.04 of its potential returns per unit of risk. Polaris Infrastructure is currently generating about -0.08 per unit of risk. If you would invest  2,886  in Boralex on December 22, 2024 and sell it today you would earn a total of  94.00  from holding Boralex or generate 3.26% return on investment over 90 days.

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

Boralex  vs.  Polaris Infrastructure

Boralex

Risk-Adjusted Performance

Weak

Compared to the overall equity markets, risk-adjusted returns on investments in Boralex are ranked lower than 2 (%) of all global equities and portfolios over the last 90 days. In spite of very healthy basic indicators, Boralex is not utilizing all of its potentials. The recent stock price disarray, may contribute to short-term losses for the investors.

Polaris Infrastructure

Risk-Adjusted Performance

Very Weak

Over the last 90 days Polaris Infrastructure has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of latest unfluctuating performance, the Stock's technical and fundamental indicators remain healthy and the recent disarray on Wall Street may also be a sign of long period gains for the firm investors.

Pair Trading with Boralex and Polaris Infrastructure

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

The idea behind Boralex and Polaris Infrastructure 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 Piotroski F Score module to get Piotroski F Score based on the binary analysis strategy of nine different fundamentals.