Correlation Between Algonquin Power and STORE ELECTRONIC
Can any of the company-specific risk be diversified away by investing in both Algonquin Power and STORE ELECTRONIC 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 STORE ELECTRONIC 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 STORE ELECTRONIC, you can compare the effects of market volatilities on Algonquin Power and STORE ELECTRONIC 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 STORE ELECTRONIC. Check out your portfolio center. Please also check ongoing floating volatility patterns of Algonquin Power and STORE ELECTRONIC.
Diversification Opportunities for Algonquin Power and STORE ELECTRONIC
0.62 | Correlation Coefficient |
Poor diversification
The 3 months correlation between Algonquin and STORE is 0.62. Overlapping area represents the amount of risk that can be diversified away by holding Algonquin Power Utilities and STORE ELECTRONIC in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on STORE ELECTRONIC 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 STORE ELECTRONIC. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of STORE ELECTRONIC has no effect on the direction of Algonquin Power i.e., Algonquin Power and STORE ELECTRONIC go up and down completely randomly.
Pair Corralation between Algonquin Power and STORE ELECTRONIC
Assuming the 90 days horizon Algonquin Power Utilities is expected to generate 0.95 times more return on investment than STORE ELECTRONIC. However, Algonquin Power Utilities is 1.06 times less risky than STORE ELECTRONIC. It trades about 0.13 of its potential returns per unit of risk. STORE ELECTRONIC is currently generating about -0.04 per unit of risk. If you would invest 443.00 in Algonquin Power Utilities on August 31, 2024 and sell it today you would earn a total of 18.00 from holding Algonquin Power Utilities or generate 4.06% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Significant |
| Accuracy | 100.0% |
| Values | Daily Returns |
Algonquin Power Utilities vs. STORE ELECTRONIC
Performance |
| Timeline |
| Algonquin Power Utilities |
| STORE ELECTRONIC |
Algonquin Power and STORE ELECTRONIC Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Algonquin Power and STORE ELECTRONIC
The main advantage of trading using opposite Algonquin Power and STORE ELECTRONIC positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Algonquin Power position performs unexpectedly, STORE ELECTRONIC 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 STORE ELECTRONIC will offset losses from the drop in STORE ELECTRONIC'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 |
| STORE ELECTRONIC vs. ADRIATIC METALS LS 013355 | STORE ELECTRONIC vs. LION ONE METALS | STORE ELECTRONIC vs. Beijing Media | STORE ELECTRONIC vs. PARKEN Sport Entertainment |
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 Transaction History module to view history of all your transactions and understand their impact on performance.
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