Correlation Between Algonquin Power and Nike
Can any of the company-specific risk be diversified away by investing in both Algonquin Power and Nike 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 Nike 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 Nike Inc, you can compare the effects of market volatilities on Algonquin Power and Nike 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 Nike. Check out your portfolio center. Please also check ongoing floating volatility patterns of Algonquin Power and Nike.
Diversification Opportunities for Algonquin Power and Nike
0.45 | Correlation Coefficient |
Very weak diversification
The 3 months correlation between Algonquin and Nike is 0.45. Overlapping area represents the amount of risk that can be diversified away by holding Algonquin Power Utilities and Nike Inc in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Nike Inc 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 Nike. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Nike Inc has no effect on the direction of Algonquin Power i.e., Algonquin Power and Nike go up and down completely randomly.
Pair Corralation between Algonquin Power and Nike
Assuming the 90 days horizon Algonquin Power Utilities is expected to generate 1.84 times more return on investment than Nike. However, Algonquin Power is 1.84 times more volatile than Nike Inc. It trades about -0.12 of its potential returns per unit of risk. Nike Inc is currently generating about -0.37 per unit of risk. If you would invest 445.00 in Algonquin Power Utilities on October 10, 2024 and sell it today you would lose (17.00) from holding Algonquin Power Utilities or give up 3.82% 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. Nike Inc
Performance |
| Timeline |
| Algonquin Power Utilities |
| Nike Inc |
Algonquin Power and Nike Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Algonquin Power and Nike
The main advantage of trading using opposite Algonquin Power and Nike positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Algonquin Power position performs unexpectedly, Nike 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 Nike will offset losses from the drop in Nike's long position.| Algonquin Power vs. Ultra Clean Holdings | Algonquin Power vs. Brockhaus Capital Management | Algonquin Power vs. MOVIE GAMES SA | Algonquin Power vs. PENN NATL GAMING |
| Nike vs. Scientific Games | Nike vs. Kingdee International Software | Nike vs. BRAGG GAMING GRP | Nike vs. AAC TECHNOLOGHLDGADR |
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 Technical Analysis module to check basic technical indicators and analysis based on most latest market data.
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