Correlation Between Alaska Hydro and Capital Power
Can any of the company-specific risk be diversified away by investing in both Alaska Hydro and Capital Power 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 Alaska Hydro and Capital Power into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Alaska Hydro and Capital Power, you can compare the effects of market volatilities on Alaska Hydro and Capital Power 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 Alaska Hydro with a short position of Capital Power. Check out your portfolio center. Please also check ongoing floating volatility patterns of Alaska Hydro and Capital Power.
Diversification Opportunities for Alaska Hydro and Capital Power
0.07 | Correlation Coefficient |
Significant diversification
The 3 months correlation between Alaska and Capital is 0.07. Overlapping area represents the amount of risk that can be diversified away by holding Alaska Hydro and Capital Power in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Capital Power and Alaska Hydro 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 Alaska Hydro are associated (or correlated) with Capital Power. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Capital Power has no effect on the direction of Alaska Hydro i.e., Alaska Hydro and Capital Power go up and down completely randomly.
Pair Corralation between Alaska Hydro and Capital Power
Assuming the 90 days trading horizon Alaska Hydro is expected to generate 12.66 times more return on investment than Capital Power. However, Alaska Hydro is 12.66 times more volatile than Capital Power. It trades about 0.07 of its potential returns per unit of risk. Capital Power is currently generating about 0.06 per unit of risk. If you would invest 2.50 in Alaska Hydro on September 3, 2024 and sell it today you would lose (1.00) from holding Alaska Hydro or give up 40.0% of portfolio value over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Insignificant |
| Accuracy | 99.8% |
| Values | Daily Returns |
Alaska Hydro vs. Capital Power
Performance |
| Timeline |
| Alaska Hydro |
| Capital Power |
Alaska Hydro and Capital Power Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Alaska Hydro and Capital Power
The main advantage of trading using opposite Alaska Hydro and Capital Power positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Alaska Hydro position performs unexpectedly, Capital Power 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 Capital Power will offset losses from the drop in Capital Power's long position.| Alaska Hydro vs. Toronto Dominion Bank | Alaska Hydro vs. Fairfax Financial Holdings | Alaska Hydro vs. Quorum Information Technologies | Alaska Hydro vs. Birchtech Corp |
| Capital Power vs. Canadian Utilities Limited | Capital Power vs. Emera Inc | Capital Power vs. Keyera Corp | Capital Power vs. Northland Power |
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 Portfolio File Import module to quickly import all of your third-party portfolios from your local drive in csv format.
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