Correlation Between Algonquin Power and Rogers Communications
Can any of the company-specific risk be diversified away by investing in both Algonquin Power and Rogers Communications 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 Rogers Communications 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 Rogers Communications, you can compare the effects of market volatilities on Algonquin Power and Rogers Communications 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 Rogers Communications. Check out your portfolio center. Please also check ongoing floating volatility patterns of Algonquin Power and Rogers Communications.
Diversification Opportunities for Algonquin Power and Rogers Communications
-0.89 | Correlation Coefficient |
Pay attention - limited upside
The 3 months correlation between Algonquin and Rogers is -0.89. Overlapping area represents the amount of risk that can be diversified away by holding Algonquin Power Utilities and Rogers Communications in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Rogers Communications 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 Rogers Communications. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Rogers Communications has no effect on the direction of Algonquin Power i.e., Algonquin Power and Rogers Communications go up and down completely randomly.
Pair Corralation between Algonquin Power and Rogers Communications
Assuming the 90 days trading horizon Algonquin Power Utilities is expected to generate 0.6 times more return on investment than Rogers Communications. However, Algonquin Power Utilities is 1.65 times less risky than Rogers Communications. It trades about 0.07 of its potential returns per unit of risk. Rogers Communications is currently generating about -0.03 per unit of risk. If you would invest 1,800 in Algonquin Power Utilities on November 4, 2024 and sell it today you would earn a total of 660.00 from holding Algonquin Power Utilities or generate 36.67% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Significant |
| Accuracy | 100.0% |
| Values | Daily Returns |
Algonquin Power Utilities vs. Rogers Communications
Performance |
| Timeline |
| Algonquin Power Utilities |
| Rogers Communications |
Algonquin Power and Rogers Communications Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Algonquin Power and Rogers Communications
The main advantage of trading using opposite Algonquin Power and Rogers Communications positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Algonquin Power position performs unexpectedly, Rogers Communications 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 Rogers Communications will offset losses from the drop in Rogers Communications' long position.| Algonquin Power vs. McEwen Mining | Algonquin Power vs. Hemisphere Energy | Algonquin Power vs. Boat Rocker Media | Algonquin Power vs. Metalero Mining Corp |
| Rogers Communications vs. Alphabet Inc CDR | Rogers Communications vs. Microsoft Corp CDR | Rogers Communications vs. NVIDIA CDR | Rogers Communications vs. Tesla Inc CDR |
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 Price Exposure Probability module to analyze equity upside and downside potential for a given time horizon across multiple markets.
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