Correlation Between Algonquin Power and BII Railway
Can any of the company-specific risk be diversified away by investing in both Algonquin Power and BII Railway 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 BII Railway 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 BII Railway Transportation, you can compare the effects of market volatilities on Algonquin Power and BII Railway 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 BII Railway. Check out your portfolio center. Please also check ongoing floating volatility patterns of Algonquin Power and BII Railway.
Diversification Opportunities for Algonquin Power and BII Railway
0.32 | Correlation Coefficient |
Weak diversification
The 3 months correlation between Algonquin and BII is 0.32. Overlapping area represents the amount of risk that can be diversified away by holding Algonquin Power Utilities and BII Railway Transportation in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on BII Railway Transpor 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 BII Railway. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of BII Railway Transpor has no effect on the direction of Algonquin Power i.e., Algonquin Power and BII Railway go up and down completely randomly.
Pair Corralation between Algonquin Power and BII Railway
Assuming the 90 days horizon Algonquin Power is expected to generate 8.94 times less return on investment than BII Railway. But when comparing it to its historical volatility, Algonquin Power Utilities is 1.06 times less risky than BII Railway. It trades about 0.02 of its potential returns per unit of risk. BII Railway Transportation is currently generating about 0.14 of returns per unit of risk over similar time horizon. If you would invest 2.65 in BII Railway Transportation on October 14, 2024 and sell it today you would earn a total of 0.10 from holding BII Railway Transportation or generate 3.77% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Very Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
Algonquin Power Utilities vs. BII Railway Transportation
Performance |
| Timeline |
| Algonquin Power Utilities |
| BII Railway Transpor |
Algonquin Power and BII Railway Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Algonquin Power and BII Railway
The main advantage of trading using opposite Algonquin Power and BII Railway positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Algonquin Power position performs unexpectedly, BII Railway 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 BII Railway will offset losses from the drop in BII Railway's long position.| Algonquin Power vs. Align Technology | Algonquin Power vs. TYSON FOODS A | Algonquin Power vs. UPDATE SOFTWARE | Algonquin Power vs. BG Foods |
| BII Railway vs. UNIVMUSIC GRPADR050 | BII Railway vs. Zoom Video Communications | BII Railway vs. Algonquin Power Utilities | BII Railway vs. DALATA HOTEL |
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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