Correlation Between Algonquin Power and Nicola Mining
Can any of the company-specific risk be diversified away by investing in both Algonquin Power and Nicola 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 Nicola 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 Nicola Mining, you can compare the effects of market volatilities on Algonquin Power and Nicola 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 Nicola Mining. Check out your portfolio center. Please also check ongoing floating volatility patterns of Algonquin Power and Nicola Mining.
Diversification Opportunities for Algonquin Power and Nicola Mining
0.42 | Correlation Coefficient |
Very weak diversification
The 3 months correlation between Algonquin and Nicola is 0.42. Overlapping area represents the amount of risk that can be diversified away by holding Algonquin Power Utilities and Nicola Mining in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Nicola 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 Nicola Mining. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Nicola Mining has no effect on the direction of Algonquin Power i.e., Algonquin Power and Nicola Mining go up and down completely randomly.
Pair Corralation between Algonquin Power and Nicola Mining
Assuming the 90 days trading horizon Algonquin Power Utilities is expected to generate 0.2 times more return on investment than Nicola Mining. However, Algonquin Power Utilities is 5.05 times less risky than Nicola Mining. It trades about 0.12 of its potential returns per unit of risk. Nicola Mining is currently generating about -0.19 per unit of risk. If you would invest 2,328 in Algonquin Power Utilities on September 2, 2024 and sell it today you would earn a total of 36.00 from holding Algonquin Power Utilities or generate 1.55% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
Algonquin Power Utilities vs. Nicola Mining
Performance |
| Timeline |
| Algonquin Power Utilities |
| Nicola Mining |
Algonquin Power and Nicola Mining Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Algonquin Power and Nicola Mining
The main advantage of trading using opposite Algonquin Power and Nicola Mining positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Algonquin Power position performs unexpectedly, Nicola 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 Nicola Mining will offset losses from the drop in Nicola Mining's long position.| Algonquin Power vs. Royal Canadian Mint | Algonquin Power vs. Cymbria | Algonquin Power vs. BMO Aggregate Bond | Algonquin Power vs. iShares Canadian HYBrid |
| Nicola Mining vs. Kiplin Metals | Nicola Mining vs. Pure Energy Minerals | Nicola Mining vs. Noram Lithium Corp | Nicola Mining vs. Minnova Corp |
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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