Correlation Between Algonquin Power and VARIOUS EATERIES
Can any of the company-specific risk be diversified away by investing in both Algonquin Power and VARIOUS EATERIES 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 VARIOUS EATERIES 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 VARIOUS EATERIES LS, you can compare the effects of market volatilities on Algonquin Power and VARIOUS EATERIES 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 VARIOUS EATERIES. Check out your portfolio center. Please also check ongoing floating volatility patterns of Algonquin Power and VARIOUS EATERIES.
Diversification Opportunities for Algonquin Power and VARIOUS EATERIES
-0.28 | Correlation Coefficient |
Very good diversification
The 3 months correlation between Algonquin and VARIOUS is -0.28. Overlapping area represents the amount of risk that can be diversified away by holding Algonquin Power Utilities and VARIOUS EATERIES LS in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on VARIOUS EATERIES 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 VARIOUS EATERIES. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of VARIOUS EATERIES has no effect on the direction of Algonquin Power i.e., Algonquin Power and VARIOUS EATERIES go up and down completely randomly.
Pair Corralation between Algonquin Power and VARIOUS EATERIES
Assuming the 90 days horizon Algonquin Power Utilities is expected to generate 1.2 times more return on investment than VARIOUS EATERIES. However, Algonquin Power is 1.2 times more volatile than VARIOUS EATERIES LS. It trades about -0.03 of its potential returns per unit of risk. VARIOUS EATERIES LS is currently generating about -0.08 per unit of risk. If you would invest 538.00 in Algonquin Power Utilities on September 12, 2024 and sell it today you would lose (87.00) from holding Algonquin Power Utilities or give up 16.17% of portfolio value over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Insignificant |
| Accuracy | 100.0% |
| Values | Daily Returns |
Algonquin Power Utilities vs. VARIOUS EATERIES LS
Performance |
| Timeline |
| Algonquin Power Utilities |
| VARIOUS EATERIES |
Algonquin Power and VARIOUS EATERIES Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Algonquin Power and VARIOUS EATERIES
The main advantage of trading using opposite Algonquin Power and VARIOUS EATERIES positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Algonquin Power position performs unexpectedly, VARIOUS EATERIES 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 VARIOUS EATERIES will offset losses from the drop in VARIOUS EATERIES'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 |
| VARIOUS EATERIES vs. Starbucks | VARIOUS EATERIES vs. Superior Plus Corp | VARIOUS EATERIES vs. SIVERS SEMICONDUCTORS AB | VARIOUS EATERIES vs. NorAm Drilling AS |
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 Odds Of Bankruptcy module to get analysis of equity chance of financial distress in the next 2 years.
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