Correlation Between Algonquin Power and Greenfire Resources
Can any of the company-specific risk be diversified away by investing in both Algonquin Power and Greenfire Resources 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 Greenfire Resources 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 Greenfire Resources, you can compare the effects of market volatilities on Algonquin Power and Greenfire Resources 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 Greenfire Resources. Check out your portfolio center. Please also check ongoing floating volatility patterns of Algonquin Power and Greenfire Resources.
Diversification Opportunities for Algonquin Power and Greenfire Resources
-0.22 | Correlation Coefficient |
Very good diversification
The 3 months correlation between Algonquin and Greenfire is -0.22. Overlapping area represents the amount of risk that can be diversified away by holding Algonquin Power Utilities and Greenfire Resources in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Greenfire Resources 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 Greenfire Resources. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Greenfire Resources has no effect on the direction of Algonquin Power i.e., Algonquin Power and Greenfire Resources go up and down completely randomly.
Pair Corralation between Algonquin Power and Greenfire Resources
Assuming the 90 days trading horizon Algonquin Power is expected to generate 4.92 times less return on investment than Greenfire Resources. But when comparing it to its historical volatility, Algonquin Power Utilities is 4.56 times less risky than Greenfire Resources. It trades about 0.09 of its potential returns per unit of risk. Greenfire Resources is currently generating about 0.1 of returns per unit of risk over similar time horizon. If you would invest 964.00 in Greenfire Resources on October 13, 2024 and sell it today you would earn a total of 55.00 from holding Greenfire Resources or generate 5.71% 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. Greenfire Resources
Performance |
| Timeline |
| Algonquin Power Utilities |
| Greenfire Resources |
Algonquin Power and Greenfire Resources Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Algonquin Power and Greenfire Resources
The main advantage of trading using opposite Algonquin Power and Greenfire Resources positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Algonquin Power position performs unexpectedly, Greenfire Resources 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 Greenfire Resources will offset losses from the drop in Greenfire Resources' long position.| Algonquin Power vs. Leading Edge Materials | Algonquin Power vs. Canso Credit Trust | Algonquin Power vs. Canadian General Investments | Algonquin Power vs. Primaris Retail RE |
| Greenfire Resources vs. Guru Organic Energy | Greenfire Resources vs. HPQ Silicon Resources | Greenfire Resources vs. Algonquin Power Utilities | Greenfire Resources vs. Pace 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 Correlation Analysis module to reduce portfolio risk simply by holding instruments which are not perfectly correlated.
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