Correlation Between Algonquin Power and CITY OFFICE
Can any of the company-specific risk be diversified away by investing in both Algonquin Power and CITY OFFICE 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 CITY OFFICE 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 CITY OFFICE REIT, you can compare the effects of market volatilities on Algonquin Power and CITY OFFICE 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 CITY OFFICE. Check out your portfolio center. Please also check ongoing floating volatility patterns of Algonquin Power and CITY OFFICE.
Diversification Opportunities for Algonquin Power and CITY OFFICE
0.69 | Correlation Coefficient |
Poor diversification
The 3 months correlation between Algonquin and CITY is 0.69. Overlapping area represents the amount of risk that can be diversified away by holding Algonquin Power Utilities and CITY OFFICE REIT in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on CITY OFFICE REIT 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 CITY OFFICE. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of CITY OFFICE REIT has no effect on the direction of Algonquin Power i.e., Algonquin Power and CITY OFFICE go up and down completely randomly.
Pair Corralation between Algonquin Power and CITY OFFICE
Assuming the 90 days horizon Algonquin Power Utilities is expected to under-perform the CITY OFFICE. But the stock apears to be less risky and, when comparing its historical volatility, Algonquin Power Utilities is 1.34 times less risky than CITY OFFICE. The stock trades about -0.1 of its potential returns per unit of risk. The CITY OFFICE REIT is currently generating about -0.03 of returns per unit of risk over similar time horizon. If you would invest 524.00 in CITY OFFICE REIT on August 27, 2024 and sell it today you would lose (56.00) from holding CITY OFFICE REIT or give up 10.69% of portfolio value over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Significant |
| Accuracy | 100.0% |
| Values | Daily Returns |
Algonquin Power Utilities vs. CITY OFFICE REIT
Performance |
| Timeline |
| Algonquin Power Utilities |
| CITY OFFICE REIT |
Algonquin Power and CITY OFFICE Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Algonquin Power and CITY OFFICE
The main advantage of trading using opposite Algonquin Power and CITY OFFICE positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Algonquin Power position performs unexpectedly, CITY OFFICE 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 CITY OFFICE will offset losses from the drop in CITY OFFICE's long position.| Algonquin Power vs. Bausch Health Companies | Algonquin Power vs. YOOMA WELLNESS INC | Algonquin Power vs. Boyd Gaming | Algonquin Power vs. NORDHEALTH AS NK |
| CITY OFFICE vs. Universal Display | CITY OFFICE vs. Citic Telecom International | CITY OFFICE vs. ANTA SPORTS PRODUCT | CITY OFFICE vs. VIAPLAY GROUP AB |
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 Transaction History module to view history of all your transactions and understand their impact on performance.
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