Correlation Between Algonquin Power and Enerflex
Can any of the company-specific risk be diversified away by investing in both Algonquin Power and Enerflex 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 Enerflex 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 Enerflex, you can compare the effects of market volatilities on Algonquin Power and Enerflex 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 Enerflex. Check out your portfolio center. Please also check ongoing floating volatility patterns of Algonquin Power and Enerflex.
Diversification Opportunities for Algonquin Power and Enerflex
-0.21 | Correlation Coefficient |
Very good diversification
The 3 months correlation between Algonquin and Enerflex is -0.21. Overlapping area represents the amount of risk that can be diversified away by holding Algonquin Power Utilities and Enerflex in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Enerflex 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 Enerflex. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Enerflex has no effect on the direction of Algonquin Power i.e., Algonquin Power and Enerflex go up and down completely randomly.
Pair Corralation between Algonquin Power and Enerflex
Assuming the 90 days trading horizon Algonquin Power is expected to generate 5.15 times less return on investment than Enerflex. But when comparing it to its historical volatility, Algonquin Power Utilities is 5.62 times less risky than Enerflex. It trades about 0.69 of its potential returns per unit of risk. Enerflex is currently generating about 0.63 of returns per unit of risk over similar time horizon. If you would invest 1,005 in Enerflex on September 12, 2024 and sell it today you would earn a total of 356.00 from holding Enerflex or generate 35.42% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Insignificant |
| Accuracy | 100.0% |
| Values | Daily Returns |
Algonquin Power Utilities vs. Enerflex
Performance |
| Timeline |
| Algonquin Power Utilities |
| Enerflex |
Algonquin Power and Enerflex Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Algonquin Power and Enerflex
The main advantage of trading using opposite Algonquin Power and Enerflex positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Algonquin Power position performs unexpectedly, Enerflex 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 Enerflex will offset losses from the drop in Enerflex's long position.| Algonquin Power vs. Microsoft Corp CDR | Algonquin Power vs. Apple Inc CDR | Algonquin Power vs. Alphabet Inc CDR | Algonquin Power vs. Amazon CDR |
| Enerflex vs. Richelieu Hardware | Enerflex vs. Mako Mining Corp | Enerflex vs. Getty Copper | Enerflex vs. Algonquin Power Utilities |
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 Manager module to state of the art Portfolio Manager to monitor and improve performance of your invested capital.
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