Correlation Between Algonquin Power and Materialise
Can any of the company-specific risk be diversified away by investing in both Algonquin Power and Materialise 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 Algonquin Power and Materialise into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Algonquin Power Utilities and Materialise NV, you can compare the effects of market volatilities on Algonquin Power and Materialise 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 Algonquin Power with a short position of Materialise. Check out your portfolio center. Please also check ongoing floating volatility patterns of Algonquin Power and Materialise.
Diversification Opportunities for Algonquin Power and Materialise
-0.6 | Correlation Coefficient |
Excellent diversification
The 3 months correlation between Algonquin and Materialise is -0.6. Overlapping area represents the amount of risk that can be diversified away by holding Algonquin Power Utilities and Materialise NV in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Materialise NV and Algonquin Power 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 Algonquin Power Utilities are associated (or correlated) with Materialise. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Materialise NV has no effect on the direction of Algonquin Power i.e., Algonquin Power and Materialise go up and down completely randomly.
Pair Corralation between Algonquin Power and Materialise
Assuming the 90 days horizon Algonquin Power Utilities is expected to under-perform the Materialise. But the stock apears to be less risky and, when comparing its historical volatility, Algonquin Power Utilities is 2.57 times less risky than Materialise. The stock trades about -0.07 of its potential returns per unit of risk. The Materialise NV is currently generating about 0.23 of returns per unit of risk over similar time horizon. If you would invest 444.00 in Materialise NV on September 12, 2024 and sell it today you would earn a total of 316.00 from holding Materialise NV or generate 71.17% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
Algonquin Power Utilities vs. Materialise NV
Performance |
| Timeline |
| Algonquin Power Utilities |
| Materialise NV |
Algonquin Power and Materialise Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Algonquin Power and Materialise
The main advantage of trading using opposite Algonquin Power and Materialise positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Algonquin Power position performs unexpectedly, Materialise 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 Materialise will offset losses from the drop in Materialise's long position.| Algonquin Power vs. Superior Plus Corp | Algonquin Power vs. SIVERS SEMICONDUCTORS AB | Algonquin Power vs. Norsk Hydro ASA | Algonquin Power vs. Reliance Steel Aluminum |
| Materialise vs. Apple Inc | Materialise vs. Apple Inc | Materialise vs. Apple Inc | Materialise vs. Apple Inc |
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 Funds Screener module to find actively-traded funds from around the world traded on over 30 global exchanges.
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