Correlation Between Algonquin Power and UNITED RENTALS
Can any of the company-specific risk be diversified away by investing in both Algonquin Power and UNITED RENTALS 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 UNITED RENTALS 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 UNITED RENTALS, you can compare the effects of market volatilities on Algonquin Power and UNITED RENTALS 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 UNITED RENTALS. Check out your portfolio center. Please also check ongoing floating volatility patterns of Algonquin Power and UNITED RENTALS.
Diversification Opportunities for Algonquin Power and UNITED RENTALS
-0.53 | Correlation Coefficient |
Excellent diversification
The 3 months correlation between Algonquin and UNITED is -0.53. Overlapping area represents the amount of risk that can be diversified away by holding Algonquin Power Utilities and UNITED RENTALS in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on UNITED RENTALS 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 UNITED RENTALS. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of UNITED RENTALS has no effect on the direction of Algonquin Power i.e., Algonquin Power and UNITED RENTALS go up and down completely randomly.
Pair Corralation between Algonquin Power and UNITED RENTALS
Assuming the 90 days horizon Algonquin Power Utilities is expected to under-perform the UNITED RENTALS. But the stock apears to be less risky and, when comparing its historical volatility, Algonquin Power Utilities is 1.2 times less risky than UNITED RENTALS. The stock trades about -0.02 of its potential returns per unit of risk. The UNITED RENTALS is currently generating about 0.09 of returns per unit of risk over similar time horizon. If you would invest 34,240 in UNITED RENTALS on August 31, 2024 and sell it today you would earn a total of 46,580 from holding UNITED RENTALS or generate 136.04% 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. UNITED RENTALS
Performance |
| Timeline |
| Algonquin Power Utilities |
| UNITED RENTALS |
Algonquin Power and UNITED RENTALS Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Algonquin Power and UNITED RENTALS
The main advantage of trading using opposite Algonquin Power and UNITED RENTALS positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Algonquin Power position performs unexpectedly, UNITED RENTALS 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 UNITED RENTALS will offset losses from the drop in UNITED RENTALS'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 |
| UNITED RENTALS vs. PLAYTECH | UNITED RENTALS vs. KOOL2PLAY SA ZY | UNITED RENTALS vs. LG Display Co | UNITED RENTALS vs. ePlay Digital |
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 Sign In To Macroaxis module to sign in to explore Macroaxis' wealth optimization platform and fintech modules.
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