Correlation Between NorthWestern and IDACORP
Can any of the company-specific risk be diversified away by investing in both NorthWestern and IDACORP 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 NorthWestern and IDACORP into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between NorthWestern and IDACORP, you can compare the effects of market volatilities on NorthWestern and IDACORP 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 NorthWestern with a short position of IDACORP. Check out your portfolio center. Please also check ongoing floating volatility patterns of NorthWestern and IDACORP.
Diversification Opportunities for NorthWestern and IDACORP
0.84 | Correlation Coefficient |
Very poor diversification
The 3 months correlation between NorthWestern and IDACORP is 0.84. Overlapping area represents the amount of risk that can be diversified away by holding NorthWestern and IDACORP in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on IDACORP and NorthWestern 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 NorthWestern are associated (or correlated) with IDACORP. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of IDACORP has no effect on the direction of NorthWestern i.e., NorthWestern and IDACORP go up and down completely randomly.
Pair Corralation between NorthWestern and IDACORP
Considering the 90-day investment horizon NorthWestern is expected to generate 1.38 times more return on investment than IDACORP. However, NorthWestern is 1.38 times more volatile than IDACORP. It trades about 0.15 of its potential returns per unit of risk. IDACORP is currently generating about 0.14 per unit of risk. If you would invest 5,202 in NorthWestern on June 11, 2025 and sell it today you would earn a total of 593.00 from holding NorthWestern or generate 11.4% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Strong |
| Accuracy | 100.0% |
| Values | Daily Returns |
NorthWestern vs. IDACORP
Performance |
| Timeline |
| NorthWestern |
| IDACORP |
NorthWestern and IDACORP Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with NorthWestern and IDACORP
The main advantage of trading using opposite NorthWestern and IDACORP positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if NorthWestern position performs unexpectedly, IDACORP 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 IDACORP will offset losses from the drop in IDACORP's long position.| NorthWestern vs. Avista | NorthWestern vs. Allete Inc | NorthWestern vs. Black Hills | NorthWestern vs. Montauk Renewables |
| IDACORP vs. Portland General Electric | IDACORP vs. TXNM Energy, | IDACORP vs. MGE Energy | IDACORP vs. CMS Energy |
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 Stocks Directory module to find actively traded stocks across global markets.
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