Correlation Between Algonquin Power and AM EAGLE
Can any of the company-specific risk be diversified away by investing in both Algonquin Power and AM EAGLE 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 AM EAGLE 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 AM EAGLE OUTFITTERS, you can compare the effects of market volatilities on Algonquin Power and AM EAGLE 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 AM EAGLE. Check out your portfolio center. Please also check ongoing floating volatility patterns of Algonquin Power and AM EAGLE.
Diversification Opportunities for Algonquin Power and AM EAGLE
0.79 | Correlation Coefficient |
Poor diversification
The 3 months correlation between Algonquin and AFG is 0.79. Overlapping area represents the amount of risk that can be diversified away by holding Algonquin Power Utilities and AM EAGLE OUTFITTERS in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on AM EAGLE OUTFITTERS 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 AM EAGLE. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of AM EAGLE OUTFITTERS has no effect on the direction of Algonquin Power i.e., Algonquin Power and AM EAGLE go up and down completely randomly.
Pair Corralation between Algonquin Power and AM EAGLE
Assuming the 90 days horizon Algonquin Power Utilities is expected to under-perform the AM EAGLE. But the stock apears to be less risky and, when comparing its historical volatility, Algonquin Power Utilities is 1.75 times less risky than AM EAGLE. The stock trades about -0.1 of its potential returns per unit of risk. The AM EAGLE OUTFITTERS is currently generating about -0.02 of returns per unit of risk over similar time horizon. If you would invest 1,725 in AM EAGLE OUTFITTERS on October 18, 2024 and sell it today you would lose (145.00) from holding AM EAGLE OUTFITTERS or give up 8.41% 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. AM EAGLE OUTFITTERS
Performance |
| Timeline |
| Algonquin Power Utilities |
| AM EAGLE OUTFITTERS |
Algonquin Power and AM EAGLE Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Algonquin Power and AM EAGLE
The main advantage of trading using opposite Algonquin Power and AM EAGLE positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Algonquin Power position performs unexpectedly, AM EAGLE 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 AM EAGLE will offset losses from the drop in AM EAGLE's long position.| Algonquin Power vs. Easy Software AG | Algonquin Power vs. BioNTech SE | Algonquin Power vs. H2O Retailing | Algonquin Power vs. MARKET VECTR RETAIL |
| AM EAGLE vs. INFORMATION SVC GRP | AM EAGLE vs. IMAGIN MEDICAL INC | AM EAGLE vs. Thai Beverage Public | AM EAGLE vs. Algonquin Power Utilities |
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 Positions Ratings module to determine portfolio positions ratings based on digital equity recommendations. Macroaxis instant position ratings are based on combination of fundamental analysis and risk-adjusted market performance.
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