Correlation Between Innergex Renewable and Fortis

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

Diversification Opportunities for Innergex Renewable and Fortis

-0.71

Correlation Coefficient

Innergex Renewable  Fortis

Pay attention - limited upside

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

Pair Corralation between Innergex Renewable and Fortis

Assuming the 90 days trading horizon Innergex Renewable Energy is expected to generate 0.24 times more return on investment than Fortis. However, Innergex Renewable Energy is 4.25 times less risky than Fortis. It trades about 0.19 of its potential returns per unit of risk. Fortis Inc is currently generating about -0.03 per unit of risk. If you would invest  1,342  in Innergex Renewable Energy on April 22, 2025 and sell it today you would earn a total of  32.00  from holding Innergex Renewable Energy or generate 2.38% return on investment over 90 days.

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

Innergex Renewable Energy  vs.  Fortis Inc

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 15 (%) of all global equities and portfolios over the last 90 days. In spite of very healthy technical and fundamental indicators, Innergex Renewable is not utilizing all of its potentials. The recent stock price disarray, may contribute to short-term losses for the investors.

Fortis Inc

Risk-Adjusted Performance

Very Weak

Over the last 90 days Fortis Inc has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of very healthy basic indicators, Fortis is not utilizing all of its potentials. The recent stock price disarray, may contribute to short-term losses for the investors.

Pair Trading with Innergex Renewable and Fortis

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

The idea behind Innergex Renewable Energy and Fortis Inc 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 Efficient Frontier module to plot and analyze your portfolio and positions against risk-return landscape of the market..