Correlation Between Algonquin Power and Sporttotal
Can any of the company-specific risk be diversified away by investing in both Algonquin Power and Sporttotal 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 Sporttotal 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 Sporttotal AG, you can compare the effects of market volatilities on Algonquin Power and Sporttotal 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 Sporttotal. Check out your portfolio center. Please also check ongoing floating volatility patterns of Algonquin Power and Sporttotal.
Diversification Opportunities for Algonquin Power and Sporttotal
0.61 | Correlation Coefficient |
Poor diversification
The 3 months correlation between Algonquin and Sporttotal is 0.61. Overlapping area represents the amount of risk that can be diversified away by holding Algonquin Power Utilities and Sporttotal AG in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Sporttotal 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 Sporttotal. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Sporttotal AG has no effect on the direction of Algonquin Power i.e., Algonquin Power and Sporttotal go up and down completely randomly.
Pair Corralation between Algonquin Power and Sporttotal
Assuming the 90 days horizon Algonquin Power Utilities is expected to generate 0.34 times more return on investment than Sporttotal. However, Algonquin Power Utilities is 2.96 times less risky than Sporttotal. It trades about -0.03 of its potential returns per unit of risk. Sporttotal AG is currently generating about -0.09 per unit of risk. If you would invest 473.00 in Algonquin Power Utilities on August 29, 2024 and sell it today you would lose (15.00) from holding Algonquin Power Utilities or give up 3.17% of portfolio value over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Significant |
| Accuracy | 100.0% |
| Values | Daily Returns |
Algonquin Power Utilities vs. Sporttotal AG
Performance |
| Timeline |
| Algonquin Power Utilities |
| Sporttotal AG |
Algonquin Power and Sporttotal Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Algonquin Power and Sporttotal
The main advantage of trading using opposite Algonquin Power and Sporttotal positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Algonquin Power position performs unexpectedly, Sporttotal 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 Sporttotal will offset losses from the drop in Sporttotal's long position.| Algonquin Power vs. Superior Plus Corp | Algonquin Power vs. SIVERS SEMICONDUCTORS AB | Algonquin Power vs. Identiv | Algonquin Power vs. Intel |
| Sporttotal vs. UNITED UTILITIES GR | Sporttotal vs. BORR DRILLING NEW | Sporttotal vs. MagnaChip Semiconductor Corp | Sporttotal vs. Tianjin Capital Environmental |
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 Idea Analyzer module to analyze all characteristics, volatility and risk-adjusted return of Macroaxis ideas.
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