Correlation Between Imperial Metals and TerraForm Power

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

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

Diversification Opportunities for Imperial Metals and TerraForm Power

0.0

Correlation Coefficient

Imperial Metals  TerraForm Power

Pay attention - limited upside

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

Pair Corralation between Imperial Metals and TerraForm Power

If you would invest  142.00  in Imperial Metals on January 31, 2024 and sell it today you would earn a total of  53.00  from holding Imperial Metals or generate 37.32% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Flat
Strength	Insignificant
Accuracy	0.0%
Values	Daily Returns

Imperial Metals  vs.  TerraForm Power

Imperial Metals

Risk-Adjusted Performance

6 of 100

Modest

Compared to the overall equity markets, risk-adjusted returns on investments in Imperial Metals are ranked lower than 6 (%) of all global equities and portfolios over the last 90 days. Despite nearly weak essential indicators, Imperial Metals may actually be approaching a critical reversion point that can send shares even higher in May 2024.

TerraForm Power

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days TerraForm Power has generated negative risk-adjusted returns adding no value to investors with long positions. Even with relatively invariable basic indicators, TerraForm Power is not utilizing all of its potentials. The current stock price agitation, may contribute to short-term losses for the retail investors.

Pair Trading with Imperial Metals and TerraForm Power

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

The idea behind Imperial Metals and TerraForm 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 Companies Directory module to evaluate performance of over 100,000 Stocks, Funds, and ETFs against different fundamentals.