Correlation Between Algonquin Power and Aya Gold
Can any of the company-specific risk be diversified away by investing in both Algonquin Power and Aya Gold 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 Aya Gold 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 Aya Gold Silver, you can compare the effects of market volatilities on Algonquin Power and Aya Gold 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 Aya Gold. Check out your portfolio center. Please also check ongoing floating volatility patterns of Algonquin Power and Aya Gold.
Diversification Opportunities for Algonquin Power and Aya Gold
-0.8 | Correlation Coefficient |
Pay attention - limited upside
The 3 months correlation between Algonquin and Aya is -0.8. Overlapping area represents the amount of risk that can be diversified away by holding Algonquin Power Utilities and Aya Gold Silver in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Aya Gold Silver 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 Aya Gold. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Aya Gold Silver has no effect on the direction of Algonquin Power i.e., Algonquin Power and Aya Gold go up and down completely randomly.
Pair Corralation between Algonquin Power and Aya Gold
Assuming the 90 days trading horizon Algonquin Power is expected to generate 2.16 times less return on investment than Aya Gold. But when comparing it to its historical volatility, Algonquin Power Utilities is 3.42 times less risky than Aya Gold. It trades about 0.07 of its potential returns per unit of risk. Aya Gold Silver is currently generating about 0.04 of returns per unit of risk over similar time horizon. If you would invest 739.00 in Aya Gold Silver on November 4, 2024 and sell it today you would earn a total of 429.00 from holding Aya Gold Silver or generate 58.05% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Significant |
| Accuracy | 100.0% |
| Values | Daily Returns |
Algonquin Power Utilities vs. Aya Gold Silver
Performance |
| Timeline |
| Algonquin Power Utilities |
| Aya Gold Silver |
Algonquin Power and Aya Gold Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Algonquin Power and Aya Gold
The main advantage of trading using opposite Algonquin Power and Aya Gold positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Algonquin Power position performs unexpectedly, Aya Gold 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 Aya Gold will offset losses from the drop in Aya Gold's long position.| Algonquin Power vs. McEwen Mining | Algonquin Power vs. Hemisphere Energy | Algonquin Power vs. Boat Rocker Media | Algonquin Power vs. Metalero Mining Corp |
| Aya Gold vs. IAMGold | Aya Gold vs. Eldorado Gold Corp | Aya Gold vs. Alamos Gold | Aya Gold vs. NovaGold Resources |
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 Odds Of Bankruptcy module to get analysis of equity chance of financial distress in the next 2 years.
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