Correlation Between Algonquin Power and Thyssenkrupp
Can any of the company-specific risk be diversified away by investing in both Algonquin Power and Thyssenkrupp 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 Thyssenkrupp 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 thyssenkrupp AG, you can compare the effects of market volatilities on Algonquin Power and Thyssenkrupp 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 Thyssenkrupp. Check out your portfolio center. Please also check ongoing floating volatility patterns of Algonquin Power and Thyssenkrupp.
Diversification Opportunities for Algonquin Power and Thyssenkrupp
-0.45 | Correlation Coefficient |
Very good diversification
The 3 months correlation between Algonquin and Thyssenkrupp is -0.45. Overlapping area represents the amount of risk that can be diversified away by holding Algonquin Power Utilities and thyssenkrupp AG in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on thyssenkrupp AG 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 Thyssenkrupp. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of thyssenkrupp AG has no effect on the direction of Algonquin Power i.e., Algonquin Power and Thyssenkrupp go up and down completely randomly.
Pair Corralation between Algonquin Power and Thyssenkrupp
Assuming the 90 days horizon Algonquin Power Utilities is expected to under-perform the Thyssenkrupp. But the stock apears to be less risky and, when comparing its historical volatility, Algonquin Power Utilities is 1.84 times less risky than Thyssenkrupp. The stock trades about -0.16 of its potential returns per unit of risk. The thyssenkrupp AG is currently generating about 0.18 of returns per unit of risk over similar time horizon. If you would invest 386.00 in thyssenkrupp AG on October 30, 2024 and sell it today you would earn a total of 70.00 from holding thyssenkrupp AG or generate 18.13% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Very Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
Algonquin Power Utilities vs. thyssenkrupp AG
Performance |
| Timeline |
| Algonquin Power Utilities |
| thyssenkrupp AG |
Algonquin Power and Thyssenkrupp Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Algonquin Power and Thyssenkrupp
The main advantage of trading using opposite Algonquin Power and Thyssenkrupp positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Algonquin Power position performs unexpectedly, Thyssenkrupp 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 Thyssenkrupp will offset losses from the drop in Thyssenkrupp's long position.| Algonquin Power vs. ARROW ELECTRONICS | Algonquin Power vs. LANDSEA GREEN MANAGEMENT | Algonquin Power vs. Meiko Electronics Co | Algonquin Power vs. Platinum Investment Management |
| Thyssenkrupp vs. Allegheny Technologies Incorporated | Thyssenkrupp vs. thyssenkrupp AG | Thyssenkrupp vs. Mueller Industries | Thyssenkrupp vs. Carpenter Technology |
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 AI Portfolio Architect module to use AI to generate optimal portfolios and find profitable investment opportunities.
Other Complementary Tools
| AI Portfolio Architect Use AI to generate optimal portfolios and find profitable investment opportunities | |
| Cryptocurrency Center Build and monitor diversified portfolio of extremely risky digital assets and cryptocurrency | |
| Watchlist Optimization Optimize watchlists to build efficient portfolios or rebalance existing positions based on the mean-variance optimization algorithm | |
| Content Syndication Quickly integrate customizable finance content to your own investment portal | |
| Portfolio Backtesting Avoid under-diversification and over-optimization by backtesting your portfolios |