Correlation Between NRG Energy and DanCann Pharma

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

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

Diversification Opportunities for NRG Energy and DanCann Pharma

0.0

Correlation Coefficient

NRG Energy  DanCann Pharma

Pay attention - limited upside

The 3 months correlation between NRG and DanCann is 0.0. Overlapping area represents the amount of risk that can be diversified away by holding NRG Energy and DanCann Pharma AS in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on DanCann Pharma AS and NRG Energy 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 NRG Energy are associated (or correlated) with DanCann Pharma. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of DanCann Pharma AS has no effect on the direction of NRG Energy i.e., NRG Energy and DanCann Pharma go up and down completely randomly.

Pair Corralation between NRG Energy and DanCann Pharma

If you would invest  9,017  in NRG Energy on September 26, 2024 and sell it today you would earn a total of  286.00  from holding NRG Energy or generate 3.17% return on investment over 90 days.

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

NRG Energy  vs.  DanCann Pharma AS

NRG Energy

Risk-Adjusted Performance

2 of 100

Weak

Compared to the overall equity markets, risk-adjusted returns on investments in NRG Energy are ranked lower than 2 (%) of all global equities and portfolios over the last 90 days. Despite nearly stable basic indicators, NRG Energy is not utilizing all of its potentials. The recent stock price disturbance, may contribute to mid-run losses for the stockholders.

DanCann Pharma AS

Risk-Adjusted Performance

0 of 100

Very Weak

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

Pair Trading with NRG Energy and DanCann Pharma

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

The idea behind NRG Energy and DanCann Pharma 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.

Check out your portfolio center.

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.