Correlation Between Boralex and Northland Power

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

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

Diversification Opportunities for Boralex and Northland Power

0.71

Correlation Coefficient

Boralex  Northland Power

Poor diversification

The 3 months correlation between Boralex and Northland is 0.71. Overlapping area represents the amount of risk that can be diversified away by holding Boralex and Northland Power in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Northland Power and Boralex 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 Boralex are associated (or correlated) with Northland Power. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Northland Power has no effect on the direction of Boralex i.e., Boralex and Northland Power go up and down completely randomly.

Pair Corralation between Boralex and Northland Power

Assuming the 90 days trading horizon Boralex is expected to generate 3.56 times less return on investment than Northland Power. In addition to that, Boralex is 1.19 times more volatile than Northland Power. It trades about 0.07 of its total potential returns per unit of risk. Northland Power is currently generating about 0.31 per unit of volatility. If you would invest  1,829  in Northland Power on April 22, 2025 and sell it today you would earn a total of  475.00  from holding Northland Power or generate 25.97% return on investment over 90 days.

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

Boralex  vs.  Northland Power

Boralex

Risk-Adjusted Performance

Modest

Compared to the overall equity markets, risk-adjusted returns on investments in Boralex are ranked lower than 5 (%) of all global equities and portfolios over the last 90 days. In spite of very weak basic indicators, Boralex may actually be approaching a critical reversion point that can send shares even higher in August 2025.

Northland Power

Risk-Adjusted Performance

Solid

Compared to the overall equity markets, risk-adjusted returns on investments in Northland Power are ranked lower than 24 (%) of all global equities and portfolios over the last 90 days. In spite of very weak forward indicators, Northland Power displayed solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with Boralex and Northland Power

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

The idea behind Boralex and Northland Power 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 Pattern Recognition module to use different Pattern Recognition models to time the market across multiple global exchanges.