Correlation Between Innergex Renewable and Northland Power

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

Diversification Opportunities for Innergex Renewable and Northland Power

0.95

Correlation Coefficient

Innergex Renewable  Northland Power

Almost no diversification

The 3 months correlation between Innergex and Northland is 0.95. Overlapping area represents the amount of risk that can be diversified away by holding Innergex Renewable Energy and Northland Power in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Northland Power 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 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 Innergex Renewable i.e., Innergex Renewable and Northland Power go up and down completely randomly.

Pair Corralation between Innergex Renewable and Northland Power

Assuming the 90 days trading horizon Innergex Renewable is expected to generate 10.27 times less return on investment than Northland Power. But when comparing it to its historical volatility, Innergex Renewable Energy is 6.1 times less risky than Northland Power. It trades about 0.19 of its potential returns per unit of risk. Northland Power is currently generating about 0.31 of returns per unit of risk over similar time horizon. 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	Very Strong
Accuracy	100.0%
Values	Daily Returns

Innergex Renewable Energy  vs.  Northland Power

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 14 (%) 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.

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 Innergex Renewable and Northland Power

The main advantage of trading using opposite Innergex Renewable and Northland Power positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Innergex Renewable 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 Innergex Renewable Energy 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.

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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 FinTech Suite module to use AI to screen and filter profitable investment opportunities.