Correlation Between Algonquin Power and NGEx Minerals
Can any of the company-specific risk be diversified away by investing in both Algonquin Power and NGEx Minerals 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 NGEx Minerals 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 NGEx Minerals, you can compare the effects of market volatilities on Algonquin Power and NGEx Minerals 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 NGEx Minerals. Check out your portfolio center. Please also check ongoing floating volatility patterns of Algonquin Power and NGEx Minerals.
Diversification Opportunities for Algonquin Power and NGEx Minerals
0.63 | Correlation Coefficient |
Poor diversification
The 3 months correlation between Algonquin and NGEx is 0.63. Overlapping area represents the amount of risk that can be diversified away by holding Algonquin Power Utilities and NGEx Minerals in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on NGEx Minerals 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 NGEx Minerals. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of NGEx Minerals has no effect on the direction of Algonquin Power i.e., Algonquin Power and NGEx Minerals go up and down completely randomly.
Pair Corralation between Algonquin Power and NGEx Minerals
Assuming the 90 days trading horizon Algonquin Power is expected to generate 2.87 times less return on investment than NGEx Minerals. But when comparing it to its historical volatility, Algonquin Power Utilities is 2.89 times less risky than NGEx Minerals. It trades about 0.08 of its potential returns per unit of risk. NGEx Minerals is currently generating about 0.07 of returns per unit of risk over similar time horizon. If you would invest 612.00 in NGEx Minerals on November 28, 2024 and sell it today you would earn a total of 739.00 from holding NGEx Minerals or generate 120.75% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Significant |
| Accuracy | 100.0% |
| Values | Daily Returns |
Algonquin Power Utilities vs. NGEx Minerals
Performance |
| Timeline |
| Algonquin Power Utilities |
| NGEx Minerals |
Algonquin Power and NGEx Minerals Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Algonquin Power and NGEx Minerals
The main advantage of trading using opposite Algonquin Power and NGEx Minerals positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Algonquin Power position performs unexpectedly, NGEx Minerals 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 NGEx Minerals will offset losses from the drop in NGEx Minerals' long position.| Algonquin Power vs. Calibre Mining Corp | Algonquin Power vs. Quipt Home Medical | Algonquin Power vs. Verizon Communications CDR | Algonquin Power vs. Marimaca Copper Corp |
| NGEx Minerals vs. Champion Iron | NGEx Minerals vs. TUT Fitness Group | NGEx Minerals vs. Bausch Health Companies | NGEx Minerals vs. WELL Health Technologies |
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 Anywhere module to track or share privately all of your investments from the convenience of any device.
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