Correlation Between Algonquin Power and Platinum Investment
Can any of the company-specific risk be diversified away by investing in both Algonquin Power and Platinum Investment 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 Platinum Investment 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 Platinum Investment Management, you can compare the effects of market volatilities on Algonquin Power and Platinum Investment 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 Platinum Investment. Check out your portfolio center. Please also check ongoing floating volatility patterns of Algonquin Power and Platinum Investment.
Diversification Opportunities for Algonquin Power and Platinum Investment
0.33 | Correlation Coefficient |
Weak diversification
The 3 months correlation between Algonquin and Platinum is 0.33. Overlapping area represents the amount of risk that can be diversified away by holding Algonquin Power Utilities and Platinum Investment Management in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Platinum Investment 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 Platinum Investment. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Platinum Investment has no effect on the direction of Algonquin Power i.e., Algonquin Power and Platinum Investment go up and down completely randomly.
Pair Corralation between Algonquin Power and Platinum Investment
Assuming the 90 days horizon Algonquin Power Utilities is expected to under-perform the Platinum Investment. But the stock apears to be less risky and, when comparing its historical volatility, Algonquin Power Utilities is 1.61 times less risky than Platinum Investment. The stock trades about -0.02 of its potential returns per unit of risk. The Platinum Investment Management is currently generating about 0.13 of returns per unit of risk over similar time horizon. If you would invest 38.00 in Platinum Investment Management on October 17, 2024 and sell it today you would earn a total of 2.00 from holding Platinum Investment Management or generate 5.26% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Very Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
Algonquin Power Utilities vs. Platinum Investment Management
Performance |
| Timeline |
| Algonquin Power Utilities |
| Platinum Investment |
Algonquin Power and Platinum Investment Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Algonquin Power and Platinum Investment
The main advantage of trading using opposite Algonquin Power and Platinum Investment positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Algonquin Power position performs unexpectedly, Platinum Investment 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 Platinum Investment will offset losses from the drop in Platinum Investment's long position.| Algonquin Power vs. Easy Software AG | Algonquin Power vs. BioNTech SE | Algonquin Power vs. H2O Retailing | Algonquin Power vs. MARKET VECTR RETAIL |
| Platinum Investment vs. Cardinal Health | Platinum Investment vs. Algonquin Power Utilities | Platinum Investment vs. PEPTONIC MEDICAL | Platinum Investment vs. CLOVER HEALTH INV |
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 Risk-Return Analysis module to view associations between returns expected from investment and the risk you assume.
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