Correlation Between Algonquin Power and KLA
Can any of the company-specific risk be diversified away by investing in both Algonquin Power and KLA 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 KLA 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 KLA Corporation, you can compare the effects of market volatilities on Algonquin Power and KLA 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 KLA. Check out your portfolio center. Please also check ongoing floating volatility patterns of Algonquin Power and KLA.
Diversification Opportunities for Algonquin Power and KLA
0.52 | Correlation Coefficient |
Very weak diversification
The 3 months correlation between Algonquin and KLA is 0.52. Overlapping area represents the amount of risk that can be diversified away by holding Algonquin Power Utilities and KLA Corp. in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on KLA Corporation 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 KLA. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of KLA Corporation has no effect on the direction of Algonquin Power i.e., Algonquin Power and KLA go up and down completely randomly.
Pair Corralation between Algonquin Power and KLA
Assuming the 90 days horizon Algonquin Power Utilities is expected to generate 0.63 times more return on investment than KLA. However, Algonquin Power Utilities is 1.6 times less risky than KLA. It trades about 0.2 of its potential returns per unit of risk. KLA Corporation is currently generating about 0.02 per unit of risk. If you would invest 430.00 in Algonquin Power Utilities on September 5, 2024 and sell it today you would earn a total of 27.00 from holding Algonquin Power Utilities or generate 6.28% 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. KLA Corp.
Performance |
| Timeline |
| Algonquin Power Utilities |
| KLA Corporation |
Algonquin Power and KLA Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Algonquin Power and KLA
The main advantage of trading using opposite Algonquin Power and KLA positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Algonquin Power position performs unexpectedly, KLA 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 KLA will offset losses from the drop in KLA'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 |
| KLA vs. MOLSON RS BEVERAGE | KLA vs. ZURICH INSURANCE GROUP | KLA vs. Algonquin Power Utilities | KLA vs. United Utilities Group |
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 Portfolio Anywhere module to track or share privately all of your investments from the convenience of any device.
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