Correlation Between Algonquin Power and Mhlbauer Holding
Can any of the company-specific risk be diversified away by investing in both Algonquin Power and Mhlbauer Holding 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 Mhlbauer Holding 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 Mhlbauer Holding AG, you can compare the effects of market volatilities on Algonquin Power and Mhlbauer Holding 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 Mhlbauer Holding. Check out your portfolio center. Please also check ongoing floating volatility patterns of Algonquin Power and Mhlbauer Holding.
Diversification Opportunities for Algonquin Power and Mhlbauer Holding
0.43 | Correlation Coefficient |
Very weak diversification
The 3 months correlation between Algonquin and Mhlbauer is 0.43. Overlapping area represents the amount of risk that can be diversified away by holding Algonquin Power Utilities and Mhlbauer Holding AG in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Mhlbauer Holding 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 Mhlbauer Holding. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Mhlbauer Holding has no effect on the direction of Algonquin Power i.e., Algonquin Power and Mhlbauer Holding go up and down completely randomly.
Pair Corralation between Algonquin Power and Mhlbauer Holding
Assuming the 90 days horizon Algonquin Power Utilities is expected to generate 1.11 times more return on investment than Mhlbauer Holding. However, Algonquin Power is 1.11 times more volatile than Mhlbauer Holding AG. It trades about -0.08 of its potential returns per unit of risk. Mhlbauer Holding AG is currently generating about -0.14 per unit of risk. If you would invest 595.00 in Algonquin Power Utilities on September 3, 2024 and sell it today you would lose (131.00) from holding Algonquin Power Utilities or give up 22.02% of portfolio value over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
Algonquin Power Utilities vs. Mhlbauer Holding AG
Performance |
| Timeline |
| Algonquin Power Utilities |
| Mhlbauer Holding |
Algonquin Power and Mhlbauer Holding Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Algonquin Power and Mhlbauer Holding
The main advantage of trading using opposite Algonquin Power and Mhlbauer Holding positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Algonquin Power position performs unexpectedly, Mhlbauer Holding 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 Mhlbauer Holding will offset losses from the drop in Mhlbauer Holding'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 |
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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 Global Correlations module to find global opportunities by holding instruments from different markets.
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