Correlation Between Algonquin Power and Fredonia Mining
Can any of the company-specific risk be diversified away by investing in both Algonquin Power and Fredonia Mining 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 Fredonia Mining 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 Fredonia Mining, you can compare the effects of market volatilities on Algonquin Power and Fredonia Mining 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 Fredonia Mining. Check out your portfolio center. Please also check ongoing floating volatility patterns of Algonquin Power and Fredonia Mining.
Diversification Opportunities for Algonquin Power and Fredonia Mining
-0.71 | Correlation Coefficient |
Pay attention - limited upside
The 3 months correlation between Algonquin and Fredonia is -0.71. Overlapping area represents the amount of risk that can be diversified away by holding Algonquin Power Utilities and Fredonia Mining in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Fredonia Mining 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 Fredonia Mining. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Fredonia Mining has no effect on the direction of Algonquin Power i.e., Algonquin Power and Fredonia Mining go up and down completely randomly.
Pair Corralation between Algonquin Power and Fredonia Mining
Assuming the 90 days trading horizon Algonquin Power Utilities is expected to generate 0.07 times more return on investment than Fredonia Mining. However, Algonquin Power Utilities is 13.99 times less risky than Fredonia Mining. It trades about 0.34 of its potential returns per unit of risk. Fredonia Mining is currently generating about -0.16 per unit of risk. If you would invest 2,322 in Algonquin Power Utilities on September 22, 2024 and sell it today you would earn a total of 103.00 from holding Algonquin Power Utilities or generate 4.44% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
Algonquin Power Utilities vs. Fredonia Mining
Performance |
| Timeline |
| Algonquin Power Utilities |
| Fredonia Mining |
Algonquin Power and Fredonia Mining Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Algonquin Power and Fredonia Mining
The main advantage of trading using opposite Algonquin Power and Fredonia Mining positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Algonquin Power position performs unexpectedly, Fredonia Mining 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 Fredonia Mining will offset losses from the drop in Fredonia Mining's long position.| Algonquin Power vs. SalesforceCom CDR | Algonquin Power vs. Chemtrade Logistics Income | Algonquin Power vs. Guru Organic Energy | Algonquin Power vs. Postmedia Network Canada |
| Fredonia Mining vs. Canso Select Opportunities | Fredonia Mining vs. Exco Technologies Limited | Fredonia Mining vs. Precious Metals And | Fredonia Mining vs. Lion One Metals |
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 FinTech Suite module to use AI to screen and filter profitable investment opportunities.
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