Correlation Between Innergex Renewable and Powertap Hydrogen

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

Diversification Opportunities for Innergex Renewable and Powertap Hydrogen

-0.24

Correlation Coefficient

Innergex Renewable  Powertap Hydrogen

Very good diversification

The 3 months correlation between Innergex and Powertap is -0.24. Overlapping area represents the amount of risk that can be diversified away by holding Innergex Renewable Energy and Powertap Hydrogen Capital in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Powertap Hydrogen Capital 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 Powertap Hydrogen. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Powertap Hydrogen Capital has no effect on the direction of Innergex Renewable i.e., Innergex Renewable and Powertap Hydrogen go up and down completely randomly.

Pair Corralation between Innergex Renewable and Powertap Hydrogen

Assuming the 90 days horizon Innergex Renewable Energy is expected to generate 0.58 times more return on investment than Powertap Hydrogen. However, Innergex Renewable Energy is 1.72 times less risky than Powertap Hydrogen. It trades about 0.15 of its potential returns per unit of risk. Powertap Hydrogen Capital is currently generating about -0.13 per unit of risk. If you would invest  555.00  in Innergex Renewable Energy on December 30, 2024 and sell it today you would earn a total of  393.00  from holding Innergex Renewable Energy or generate 70.81% return on investment over 90 days.

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

Innergex Renewable Energy  vs.  Powertap Hydrogen Capital

Innergex Renewable Energy

Risk-Adjusted Performance

Good

Compared to the overall equity markets, risk-adjusted returns on investments in Innergex Renewable Energy are ranked lower than 11 (%) 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.

Powertap Hydrogen Capital

Risk-Adjusted Performance

Very Weak

Over the last 90 days Powertap Hydrogen Capital has generated negative risk-adjusted returns adding no value to investors with long positions. Despite weak performance in the last few months, the Stock's basic indicators remain nearly stable which may send shares a bit higher in April 2025. The current disturbance may also be a sign of long-run up-swing for the company stockholders.

Pair Trading with Innergex Renewable and Powertap Hydrogen

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

The idea behind Innergex Renewable Energy and Powertap Hydrogen Capital 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 Volatility Analysis module to get historical volatility and risk analysis based on latest market data.