Correlation Between Allete and Fusion Fuel
Can any of the company-specific risk be diversified away by investing in both Allete and Fusion Fuel 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 Allete and Fusion Fuel into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Allete Inc and Fusion Fuel Green, you can compare the effects of market volatilities on Allete and Fusion Fuel 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 Allete with a short position of Fusion Fuel. Check out your portfolio center. Please also check ongoing floating volatility patterns of Allete and Fusion Fuel.
Diversification Opportunities for Allete and Fusion Fuel
-0.56 | Correlation Coefficient |
Excellent diversification
The 3 months correlation between Allete and Fusion is -0.56. Overlapping area represents the amount of risk that can be diversified away by holding Allete Inc and Fusion Fuel Green in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Fusion Fuel Green and Allete 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 Allete Inc are associated (or correlated) with Fusion Fuel. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Fusion Fuel Green has no effect on the direction of Allete i.e., Allete and Fusion Fuel go up and down completely randomly.
Pair Corralation between Allete and Fusion Fuel
Considering the 90-day investment horizon Allete Inc is expected to generate 0.14 times more return on investment than Fusion Fuel. However, Allete Inc is 6.96 times less risky than Fusion Fuel. It trades about 0.02 of its potential returns per unit of risk. Fusion Fuel Green is currently generating about -0.03 per unit of risk. If you would invest 6,000 in Allete Inc on August 24, 2024 and sell it today you would earn a total of 493.00 from holding Allete Inc or generate 8.22% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Very Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
Allete Inc vs. Fusion Fuel Green
Performance |
| Timeline |
| Allete Inc |
| Fusion Fuel Green |
Allete and Fusion Fuel Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Allete and Fusion Fuel
The main advantage of trading using opposite Allete and Fusion Fuel positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Allete position performs unexpectedly, Fusion Fuel 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 Fusion Fuel will offset losses from the drop in Fusion Fuel's long position.| Allete vs. Avista | Allete vs. Black Hills | Allete vs. Montauk Renewables | Allete vs. Companhia Paranaense de |
| Fusion Fuel vs. Advent Technologies Holdings | Fusion Fuel vs. Fluence Energy | Fusion Fuel vs. Enlight Renewable Energy | Fusion Fuel vs. Renew Energy Global |
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 Equity Forecasting module to use basic forecasting models to generate price predictions and determine price momentum.
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