Correlation Between Algonquin Power and Walker Dunlop
Can any of the company-specific risk be diversified away by investing in both Algonquin Power and Walker Dunlop 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 Walker Dunlop 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 Walker Dunlop, you can compare the effects of market volatilities on Algonquin Power and Walker Dunlop 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 Walker Dunlop. Check out your portfolio center. Please also check ongoing floating volatility patterns of Algonquin Power and Walker Dunlop.
Diversification Opportunities for Algonquin Power and Walker Dunlop
0.67 | Correlation Coefficient |
Poor diversification
The 3 months correlation between Algonquin and Walker is 0.67. Overlapping area represents the amount of risk that can be diversified away by holding Algonquin Power Utilities and Walker Dunlop in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Walker Dunlop 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 Walker Dunlop. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Walker Dunlop has no effect on the direction of Algonquin Power i.e., Algonquin Power and Walker Dunlop go up and down completely randomly.
Pair Corralation between Algonquin Power and Walker Dunlop
Assuming the 90 days horizon Algonquin Power Utilities is expected to generate 0.7 times more return on investment than Walker Dunlop. However, Algonquin Power Utilities is 1.42 times less risky than Walker Dunlop. It trades about -0.02 of its potential returns per unit of risk. Walker Dunlop is currently generating about -0.03 per unit of risk. If you would invest 420.00 in Algonquin Power Utilities on October 29, 2024 and sell it today you would lose (3.00) from holding Algonquin Power Utilities or give up 0.71% 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. Walker Dunlop
Performance |
| Timeline |
| Algonquin Power Utilities |
| Walker Dunlop |
Algonquin Power and Walker Dunlop Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Algonquin Power and Walker Dunlop
The main advantage of trading using opposite Algonquin Power and Walker Dunlop positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Algonquin Power position performs unexpectedly, Walker Dunlop 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 Walker Dunlop will offset losses from the drop in Walker Dunlop's long position.| Algonquin Power vs. TRAINLINE PLC LS | Algonquin Power vs. SAFEROADS HLDGS | Algonquin Power vs. NURAN WIRELESS INC | Algonquin Power vs. Gold Road Resources |
| Walker Dunlop vs. Erste Group Bank | Walker Dunlop vs. TT Electronics PLC | Walker Dunlop vs. KIMBALL ELECTRONICS | Walker Dunlop vs. Synovus Financial Corp |
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 Money Flow Index module to determine momentum by analyzing Money Flow Index and other technical indicators.
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