Correlation Between Innergex Renewable and 5N Plus

Can any of the company-specific risk be diversified away by investing in both Innergex Renewable and 5N Plus 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 Innergex Renewable and 5N Plus into the same portfolio, which is an essential part of the fundamental portfolio management process.

By analyzing existing cross correlation between Innergex Renewable Energy and 5N Plus, you can compare the effects of market volatilities on Innergex Renewable and 5N Plus 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 Innergex Renewable with a short position of 5N Plus. Check out your portfolio center. Please also check ongoing floating volatility patterns of Innergex Renewable and 5N Plus.

Diversification Opportunities for Innergex Renewable and 5N Plus

0.3

Correlation Coefficient

Innergex Renewable  5N Plus

Weak diversification

The 3 months correlation between Innergex and VNP is 0.3. Overlapping area represents the amount of risk that can be diversified away by holding Innergex Renewable Energy and 5N Plus in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on 5N Plus and Innergex Renewable 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 Innergex Renewable Energy are associated (or correlated) with 5N Plus. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of 5N Plus has no effect on the direction of Innergex Renewable i.e., Innergex Renewable and 5N Plus go up and down completely randomly.

Pair Corralation between Innergex Renewable and 5N Plus

Assuming the 90 days trading horizon Innergex Renewable Energy is expected to generate 0.95 times more return on investment than 5N Plus. However, Innergex Renewable Energy is 1.05 times less risky than 5N Plus. It trades about 0.01 of its potential returns per unit of risk. 5N Plus is currently generating about -0.02 per unit of risk. If you would invest  873.00  in Innergex Renewable Energy on September 2, 2024 and sell it today you would earn a total of  0.00  from holding Innergex Renewable Energy or generate 0.0% return on investment over 90 days.

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

Innergex Renewable Energy  vs.  5N Plus

Innergex Renewable Energy

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Innergex Renewable Energy has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of very healthy technical and fundamental indicators, Innergex Renewable is not utilizing all of its potentials. The recent stock price disarray, may contribute to short-term losses for the investors.

5N Plus

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days 5N Plus has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of very healthy basic indicators, 5N Plus is not utilizing all of its potentials. The recent stock price disarray, may contribute to short-term losses for the investors.

Pair Trading with Innergex Renewable and 5N Plus

The main advantage of trading using opposite Innergex Renewable and 5N Plus positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Innergex Renewable position performs unexpectedly, 5N Plus 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 5N Plus will offset losses from the drop in 5N Plus' long position.

The idea behind Innergex Renewable Energy and 5N Plus 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 Crypto Correlations module to use cryptocurrency correlation module to diversify your cryptocurrency portfolio across multiple coins.