Correlation Between Algonquin Power and NH HOTEL
Can any of the company-specific risk be diversified away by investing in both Algonquin Power and NH HOTEL 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 NH HOTEL 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 NH HOTEL GROUP, you can compare the effects of market volatilities on Algonquin Power and NH HOTEL 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 NH HOTEL. Check out your portfolio center. Please also check ongoing floating volatility patterns of Algonquin Power and NH HOTEL.
Diversification Opportunities for Algonquin Power and NH HOTEL
-0.37 | Correlation Coefficient |
Very good diversification
The 3 months correlation between Algonquin and NH5 is -0.37. Overlapping area represents the amount of risk that can be diversified away by holding Algonquin Power Utilities and NH HOTEL GROUP in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on NH HOTEL 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 NH HOTEL. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of NH HOTEL GROUP has no effect on the direction of Algonquin Power i.e., Algonquin Power and NH HOTEL go up and down completely randomly.
Pair Corralation between Algonquin Power and NH HOTEL
Assuming the 90 days horizon Algonquin Power Utilities is expected to generate 0.52 times more return on investment than NH HOTEL. However, Algonquin Power Utilities is 1.93 times less risky than NH HOTEL. It trades about 0.18 of its potential returns per unit of risk. NH HOTEL GROUP is currently generating about 0.01 per unit of risk. If you would invest 439.00 in Algonquin Power Utilities on September 1, 2024 and sell it today you would earn a total of 25.00 from holding Algonquin Power Utilities or generate 5.69% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Insignificant |
| Accuracy | 100.0% |
| Values | Daily Returns |
Algonquin Power Utilities vs. NH HOTEL GROUP
Performance |
| Timeline |
| Algonquin Power Utilities |
| NH HOTEL GROUP |
Algonquin Power and NH HOTEL Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Algonquin Power and NH HOTEL
The main advantage of trading using opposite Algonquin Power and NH HOTEL positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Algonquin Power position performs unexpectedly, NH HOTEL 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 NH HOTEL will offset losses from the drop in NH HOTEL's long position.| Algonquin Power vs. Entravision Communications | Algonquin Power vs. CeoTronics AG | Algonquin Power vs. Ribbon Communications | Algonquin Power vs. INTERSHOP Communications Aktiengesellschaft |
| NH HOTEL vs. SIVERS SEMICONDUCTORS AB | NH HOTEL vs. Darden Restaurants | NH HOTEL vs. Reliance Steel Aluminum | NH HOTEL vs. Q2M Managementberatung AG |
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 Dashboard module to portfolio dashboard that provides centralized access to all your investments.
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