Correlation Between Algonquin Power and Air Liquide
Can any of the company-specific risk be diversified away by investing in both Algonquin Power and Air Liquide 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 Air Liquide 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 Air Liquide SA, you can compare the effects of market volatilities on Algonquin Power and Air Liquide 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 Air Liquide. Check out your portfolio center. Please also check ongoing floating volatility patterns of Algonquin Power and Air Liquide.
Diversification Opportunities for Algonquin Power and Air Liquide
0.59 | Correlation Coefficient |
Very weak diversification
The 3 months correlation between Algonquin and Air is 0.59. Overlapping area represents the amount of risk that can be diversified away by holding Algonquin Power Utilities and Air Liquide SA in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Air Liquide SA 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 Air Liquide. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Air Liquide SA has no effect on the direction of Algonquin Power i.e., Algonquin Power and Air Liquide go up and down completely randomly.
Pair Corralation between Algonquin Power and Air Liquide
Assuming the 90 days horizon Algonquin Power Utilities is expected to under-perform the Air Liquide. In addition to that, Algonquin Power is 1.75 times more volatile than Air Liquide SA. It trades about -0.05 of its total potential returns per unit of risk. Air Liquide SA is currently generating about 0.03 per unit of volatility. If you would invest 14,311 in Air Liquide SA on August 28, 2024 and sell it today you would earn a total of 1,605 from holding Air Liquide SA or generate 11.22% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
Algonquin Power Utilities vs. Air Liquide SA
Performance |
| Timeline |
| Algonquin Power Utilities |
| Air Liquide SA |
Algonquin Power and Air Liquide Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Algonquin Power and Air Liquide
The main advantage of trading using opposite Algonquin Power and Air Liquide positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Algonquin Power position performs unexpectedly, Air Liquide 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 Air Liquide will offset losses from the drop in Air Liquide's long position.| Algonquin Power vs. Superior Plus Corp | Algonquin Power vs. NMI Holdings | Algonquin Power vs. Origin Agritech | Algonquin Power vs. SIVERS SEMICONDUCTORS AB |
| Air Liquide vs. Tyson Foods | Air Liquide vs. Astral Foods Limited | Air Liquide vs. JJ SNACK FOODS | Air Liquide vs. KENNAMETAL INC |
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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