Correlation Between Innergex Renewable and Capstone Infrastructure

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

Diversification Opportunities for Innergex Renewable and Capstone Infrastructure

0.64

Correlation Coefficient

Innergex Renewable  Capstone Infrastructure

Poor diversification

The 3 months correlation between Innergex and Capstone is 0.64. Overlapping area represents the amount of risk that can be diversified away by holding Innergex Renewable Energy and Capstone Infrastructure Corp in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Capstone Infrastructure 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 Capstone Infrastructure. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Capstone Infrastructure has no effect on the direction of Innergex Renewable i.e., Innergex Renewable and Capstone Infrastructure go up and down completely randomly.

Pair Corralation between Innergex Renewable and Capstone Infrastructure

Assuming the 90 days trading horizon Innergex Renewable is expected to generate 3.84 times less return on investment than Capstone Infrastructure. But when comparing it to its historical volatility, Innergex Renewable Energy is 3.8 times less risky than Capstone Infrastructure. It trades about 0.14 of its potential returns per unit of risk. Capstone Infrastructure Corp is currently generating about 0.15 of returns per unit of risk over similar time horizon. If you would invest  1,500  in Capstone Infrastructure Corp on April 7, 2025 and sell it today you would earn a total of  172.00  from holding Capstone Infrastructure Corp or generate 11.47% return on investment over 90 days.

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

Innergex Renewable Energy  vs.  Capstone Infrastructure Corp

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 somewhat strong technical and fundamental indicators, Innergex Renewable is not utilizing all of its potentials. The latest stock price disturbance, may contribute to short-term losses for the investors.

Capstone Infrastructure

Risk-Adjusted Performance

Good

Compared to the overall equity markets, risk-adjusted returns on investments in Capstone Infrastructure Corp are ranked lower than 11 (%) of all global equities and portfolios over the last 90 days. Despite somewhat unfluctuating technical and fundamental indicators, Capstone Infrastructure may actually be approaching a critical reversion point that can send shares even higher in August 2025.

Pair Trading with Innergex Renewable and Capstone Infrastructure

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

The idea behind Innergex Renewable Energy and Capstone Infrastructure Corp 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 Commodity Directory module to find actively traded commodities issued by global exchanges.