Correlation Between Innergex Renewable and Atco

Can any of the company-specific risk be diversified away by investing in both Innergex Renewable and Atco 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 Atco 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 Atco, you can compare the effects of market volatilities on Innergex Renewable and Atco 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 Atco. Check out your portfolio center. Please also check ongoing floating volatility patterns of Innergex Renewable and Atco.

Diversification Opportunities for Innergex Renewable and Atco

0.31

Correlation Coefficient

Innergex Renewable  Atco

Weak diversification

The 3 months correlation between Innergex and Atco is 0.31. Overlapping area represents the amount of risk that can be diversified away by holding Innergex Renewable Energy and Atco in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Atco 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 Atco. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Atco has no effect on the direction of Innergex Renewable i.e., Innergex Renewable and Atco go up and down completely randomly.

Pair Corralation between Innergex Renewable and Atco

Assuming the 90 days horizon Innergex Renewable Energy is expected to generate 3.47 times more return on investment than Atco. However, Innergex Renewable is 3.47 times more volatile than Atco. It trades about 0.02 of its potential returns per unit of risk. Atco is currently generating about 0.03 per unit of risk. If you would invest  971.00  in Innergex Renewable Energy on December 4, 2024 and sell it today you would lose (38.00) from holding Innergex Renewable Energy or give up 3.91% of portfolio value over 90 days.

Time Period	3 Months [change]
Direction	Moves Together
Strength	Very Weak
Accuracy	95.08%
Values	Daily Returns

Innergex Renewable Energy  vs.  Atco

Innergex Renewable Energy

Risk-Adjusted Performance

OK

Compared to the overall equity markets, risk-adjusted returns on investments in Innergex Renewable Energy are ranked lower than 10 (%) of all global equities and portfolios over the last 90 days. Despite nearly fragile basic indicators, Innergex Renewable reported solid returns over the last few months and may actually be approaching a breakup point.

Atco

Risk-Adjusted Performance

Very Weak

Over the last 90 days Atco has generated negative risk-adjusted returns adding no value to investors with long positions. Despite latest unsteady performance, the Stock's essential indicators remain stable and the current disturbance on Wall Street may also be a sign of long-run gains for the company stockholders.

Pair Trading with Innergex Renewable and Atco

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

The idea behind Innergex Renewable Energy and Atco 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 Fundamental Analysis module to view fundamental data based on most recent published financial statements.