Correlation Between Algonquin Power and PLAYMATES TOYS
Can any of the company-specific risk be diversified away by investing in both Algonquin Power and PLAYMATES TOYS 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 PLAYMATES TOYS 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 PLAYMATES TOYS, you can compare the effects of market volatilities on Algonquin Power and PLAYMATES TOYS 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 PLAYMATES TOYS. Check out your portfolio center. Please also check ongoing floating volatility patterns of Algonquin Power and PLAYMATES TOYS.
Diversification Opportunities for Algonquin Power and PLAYMATES TOYS
-0.4 | Correlation Coefficient |
Very good diversification
The 3 months correlation between Algonquin and PLAYMATES is -0.4. Overlapping area represents the amount of risk that can be diversified away by holding Algonquin Power Utilities and PLAYMATES TOYS in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on PLAYMATES TOYS 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 PLAYMATES TOYS. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of PLAYMATES TOYS has no effect on the direction of Algonquin Power i.e., Algonquin Power and PLAYMATES TOYS go up and down completely randomly.
Pair Corralation between Algonquin Power and PLAYMATES TOYS
Assuming the 90 days horizon Algonquin Power Utilities is expected to generate 0.54 times more return on investment than PLAYMATES TOYS. However, Algonquin Power Utilities is 1.86 times less risky than PLAYMATES TOYS. It trades about -0.08 of its potential returns per unit of risk. PLAYMATES TOYS is currently generating about -0.06 per unit of risk. If you would invest 443.00 in Algonquin Power Utilities on September 14, 2024 and sell it today you would lose (13.00) from holding Algonquin Power Utilities or give up 2.93% of portfolio value over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Very Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
Algonquin Power Utilities vs. PLAYMATES TOYS
Performance |
| Timeline |
| Algonquin Power Utilities |
| PLAYMATES TOYS |
Algonquin Power and PLAYMATES TOYS Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Algonquin Power and PLAYMATES TOYS
The main advantage of trading using opposite Algonquin Power and PLAYMATES TOYS positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Algonquin Power position performs unexpectedly, PLAYMATES TOYS 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 PLAYMATES TOYS will offset losses from the drop in PLAYMATES TOYS'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 |
| PLAYMATES TOYS vs. GALENA MINING LTD | PLAYMATES TOYS vs. LION ONE METALS | PLAYMATES TOYS vs. ASSOC BR FOODS | PLAYMATES TOYS vs. TYSON FOODS A |
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 Idea Breakdown module to analyze constituents of all Macroaxis ideas. Macroaxis investment ideas are predefined, sector-focused investing themes.
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