Correlation Between Innergex Renewable and Orsted AS

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

Diversification Opportunities for Innergex Renewable and Orsted AS

0.76

Correlation Coefficient

Innergex Renewable  Orsted AS

Poor diversification

The 3 months correlation between Innergex and Orsted is 0.76. Overlapping area represents the amount of risk that can be diversified away by holding Innergex Renewable Energy and Orsted AS in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Orsted AS 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 Orsted AS. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Orsted AS has no effect on the direction of Innergex Renewable i.e., Innergex Renewable and Orsted AS go up and down completely randomly.

Pair Corralation between Innergex Renewable and Orsted AS

Assuming the 90 days horizon Innergex Renewable Energy is expected to generate 1.31 times more return on investment than Orsted AS. However, Innergex Renewable is 1.31 times more volatile than Orsted AS. It trades about 0.01 of its potential returns per unit of risk. Orsted AS is currently generating about -0.01 per unit of risk. If you would invest  650.00  in Innergex Renewable Energy on September 3, 2024 and sell it today you would lose (22.00) from holding Innergex Renewable Energy or give up 3.38% of portfolio value over 90 days.

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

Innergex Renewable Energy  vs.  Orsted AS

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. Despite nearly stable basic indicators, Innergex Renewable is not utilizing all of its potentials. The current stock price disturbance, may contribute to mid-run losses for the stockholders.

Orsted AS

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Orsted AS has generated negative risk-adjusted returns adding no value to investors with long positions. Despite nearly stable technical and fundamental indicators, Orsted AS is not utilizing all of its potentials. The current stock price disturbance, may contribute to mid-run losses for the stockholders.

Pair Trading with Innergex Renewable and Orsted AS

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

The idea behind Innergex Renewable Energy and Orsted AS 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 Portfolio Optimization module to compute new portfolio that will generate highest expected return given your specified tolerance for risk.