Correlation Between G8 EDUCATION and Algonquin Power
Can any of the company-specific risk be diversified away by investing in both G8 EDUCATION and Algonquin 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 G8 EDUCATION and Algonquin Power into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between G8 EDUCATION and Algonquin Power Utilities, you can compare the effects of market volatilities on G8 EDUCATION and Algonquin 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 G8 EDUCATION with a short position of Algonquin Power. Check out your portfolio center. Please also check ongoing floating volatility patterns of G8 EDUCATION and Algonquin Power.
Diversification Opportunities for G8 EDUCATION and Algonquin Power
0.27 | Correlation Coefficient |
Modest diversification
The 3 months correlation between 3EAG and Algonquin is 0.27. Overlapping area represents the amount of risk that can be diversified away by holding G8 EDUCATION and Algonquin Power Utilities in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Algonquin Power Utilities and G8 EDUCATION 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 G8 EDUCATION are associated (or correlated) with Algonquin Power. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Algonquin Power Utilities has no effect on the direction of G8 EDUCATION i.e., G8 EDUCATION and Algonquin Power go up and down completely randomly.
Pair Corralation between G8 EDUCATION and Algonquin Power
Assuming the 90 days trading horizon G8 EDUCATION is expected to generate 0.8 times more return on investment than Algonquin Power. However, G8 EDUCATION is 1.24 times less risky than Algonquin Power. It trades about 0.27 of its potential returns per unit of risk. Algonquin Power Utilities is currently generating about -0.08 per unit of risk. If you would invest 75.00 in G8 EDUCATION on November 8, 2024 and sell it today you would earn a total of 7.00 from holding G8 EDUCATION or generate 9.33% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Very Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
G8 EDUCATION vs. Algonquin Power Utilities
Performance |
| Timeline |
| G8 EDUCATION |
| Algonquin Power Utilities |
G8 EDUCATION and Algonquin Power Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with G8 EDUCATION and Algonquin Power
The main advantage of trading using opposite G8 EDUCATION and Algonquin Power positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if G8 EDUCATION position performs unexpectedly, Algonquin 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 Algonquin Power will offset losses from the drop in Algonquin Power's long position.| G8 EDUCATION vs. NH HOTEL GROUP | G8 EDUCATION vs. Hyatt Hotels | G8 EDUCATION vs. MONEYSUPERMARKET | G8 EDUCATION vs. Fevertree Drinks PLC |
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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 Portfolio Backtesting module to avoid under-diversification and over-optimization by backtesting your portfolios.
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