Correlation Between Algonquin Power and SBI Insurance
Can any of the company-specific risk be diversified away by investing in both Algonquin Power and SBI 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 SBI 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 SBI Insurance Group, you can compare the effects of market volatilities on Algonquin Power and SBI 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 SBI Insurance. Check out your portfolio center. Please also check ongoing floating volatility patterns of Algonquin Power and SBI Insurance.
Diversification Opportunities for Algonquin Power and SBI Insurance
-0.43 | Correlation Coefficient |
Very good diversification
The 3 months correlation between Algonquin and SBI is -0.43. Overlapping area represents the amount of risk that can be diversified away by holding Algonquin Power Utilities and SBI Insurance Group in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on SBI Insurance Group 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 SBI Insurance. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of SBI Insurance Group has no effect on the direction of Algonquin Power i.e., Algonquin Power and SBI Insurance go up and down completely randomly.
Pair Corralation between Algonquin Power and SBI Insurance
Assuming the 90 days horizon Algonquin Power Utilities is expected to under-perform the SBI Insurance. But the stock apears to be less risky and, when comparing its historical volatility, Algonquin Power Utilities is 1.25 times less risky than SBI Insurance. The stock trades about -0.14 of its potential returns per unit of risk. The SBI Insurance Group is currently generating about 0.05 of returns per unit of risk over similar time horizon. If you would invest 595.00 in SBI Insurance Group on September 27, 2024 and sell it today you would earn a total of 10.00 from holding SBI Insurance Group or generate 1.68% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Very Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
Algonquin Power Utilities vs. SBI Insurance Group
Performance |
| Timeline |
| Algonquin Power Utilities |
| SBI Insurance Group |
Algonquin Power and SBI Insurance Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Algonquin Power and SBI Insurance
The main advantage of trading using opposite Algonquin Power and SBI Insurance positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Algonquin Power position performs unexpectedly, SBI 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 SBI Insurance will offset losses from the drop in SBI Insurance's long position.| Algonquin Power vs. KB HOME | Algonquin Power vs. United Breweries Co | Algonquin Power vs. Major Drilling Group | Algonquin Power vs. MOLSON RS BEVERAGE |
| SBI Insurance vs. Apple Inc | SBI Insurance vs. Apple Inc | SBI Insurance vs. Apple Inc | SBI Insurance vs. Apple 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 Idea Breakdown module to analyze constituents of all Macroaxis ideas. Macroaxis investment ideas are predefined, sector-focused investing themes.
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