Correlation Between Algonquin Power and BNP PARIBAS
Can any of the company-specific risk be diversified away by investing in both Algonquin Power and BNP PARIBAS 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 BNP PARIBAS 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 BNP PARIBAS ADR, you can compare the effects of market volatilities on Algonquin Power and BNP PARIBAS 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 BNP PARIBAS. Check out your portfolio center. Please also check ongoing floating volatility patterns of Algonquin Power and BNP PARIBAS.
Diversification Opportunities for Algonquin Power and BNP PARIBAS
0.23 | Correlation Coefficient |
Modest diversification
The 3 months correlation between Algonquin and BNP is 0.23. Overlapping area represents the amount of risk that can be diversified away by holding Algonquin Power Utilities and BNP PARIBAS ADR in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on BNP PARIBAS ADR 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 BNP PARIBAS. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of BNP PARIBAS ADR has no effect on the direction of Algonquin Power i.e., Algonquin Power and BNP PARIBAS go up and down completely randomly.
Pair Corralation between Algonquin Power and BNP PARIBAS
Assuming the 90 days horizon Algonquin Power Utilities is expected to generate 0.98 times more return on investment than BNP PARIBAS. However, Algonquin Power Utilities is 1.02 times less risky than BNP PARIBAS. It trades about -0.01 of its potential returns per unit of risk. BNP PARIBAS ADR is currently generating about -0.1 per unit of risk. If you would invest 470.00 in Algonquin Power Utilities on September 3, 2024 and sell it today you would lose (6.00) from holding Algonquin Power Utilities or give up 1.28% of portfolio value over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Very Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
Algonquin Power Utilities vs. BNP PARIBAS ADR
Performance |
| Timeline |
| Algonquin Power Utilities |
| BNP PARIBAS ADR |
Algonquin Power and BNP PARIBAS Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Algonquin Power and BNP PARIBAS
The main advantage of trading using opposite Algonquin Power and BNP PARIBAS positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Algonquin Power position performs unexpectedly, BNP PARIBAS 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 BNP PARIBAS will offset losses from the drop in BNP PARIBAS's long position.| Algonquin Power vs. Treasury Wine Estates | Algonquin Power vs. X FAB Silicon Foundries | Algonquin Power vs. Silicon Motion Technology | Algonquin Power vs. CVW CLEANTECH INC |
| BNP PARIBAS vs. REGAL ASIAN INVESTMENTS | BNP PARIBAS vs. EAT WELL INVESTMENT | BNP PARIBAS vs. BII Railway Transportation | BNP PARIBAS vs. Gladstone Investment |
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 My Watchlist Analysis module to analyze my current watchlist and to refresh optimization strategy. Macroaxis watchlist is based on self-learning algorithm to remember stocks you like.
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