Correlation Between Algonquin Power and LIFENET INSURANCE
Can any of the company-specific risk be diversified away by investing in both Algonquin Power and LIFENET INSURANCE 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 LIFENET INSURANCE 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 LIFENET INSURANCE CO, you can compare the effects of market volatilities on Algonquin Power and LIFENET INSURANCE 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 LIFENET INSURANCE. Check out your portfolio center. Please also check ongoing floating volatility patterns of Algonquin Power and LIFENET INSURANCE.
Diversification Opportunities for Algonquin Power and LIFENET INSURANCE
-0.73 | Correlation Coefficient |
Pay attention - limited upside
The 3 months correlation between Algonquin and LIFENET is -0.73. Overlapping area represents the amount of risk that can be diversified away by holding Algonquin Power Utilities and LIFENET INSURANCE CO in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on LIFENET INSURANCE 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 LIFENET INSURANCE. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of LIFENET INSURANCE has no effect on the direction of Algonquin Power i.e., Algonquin Power and LIFENET INSURANCE go up and down completely randomly.
Pair Corralation between Algonquin Power and LIFENET INSURANCE
Assuming the 90 days horizon Algonquin Power Utilities is expected to generate 0.62 times more return on investment than LIFENET INSURANCE. However, Algonquin Power Utilities is 1.61 times less risky than LIFENET INSURANCE. It trades about -0.15 of its potential returns per unit of risk. LIFENET INSURANCE CO is currently generating about -0.11 per unit of risk. If you would invest 452.00 in Algonquin Power Utilities on September 15, 2024 and sell it today you would lose (22.00) from holding Algonquin Power Utilities or give up 4.87% of portfolio value over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
Algonquin Power Utilities vs. LIFENET INSURANCE CO
Performance |
| Timeline |
| Algonquin Power Utilities |
| LIFENET INSURANCE |
Algonquin Power and LIFENET INSURANCE Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Algonquin Power and LIFENET INSURANCE
The main advantage of trading using opposite Algonquin Power and LIFENET INSURANCE positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Algonquin Power position performs unexpectedly, LIFENET INSURANCE 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 LIFENET INSURANCE will offset losses from the drop in LIFENET INSURANCE'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 |
| LIFENET INSURANCE vs. Xtrackers LevDAX | LIFENET INSURANCE vs. Lyxor 1 | LIFENET INSURANCE vs. Xtrackers ShortDAX |
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 Economic Indicators module to top statistical indicators that provide insights into how an economy is performing.
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