Correlation Between Algonquin Power and Medical Facilities
Can any of the company-specific risk be diversified away by investing in both Algonquin Power and Medical Facilities 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 Medical Facilities 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 Medical Facilities, you can compare the effects of market volatilities on Algonquin Power and Medical Facilities 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 Medical Facilities. Check out your portfolio center. Please also check ongoing floating volatility patterns of Algonquin Power and Medical Facilities.
Diversification Opportunities for Algonquin Power and Medical Facilities
-0.71 | Correlation Coefficient |
Pay attention - limited upside
The 3 months correlation between Algonquin and Medical is -0.71. Overlapping area represents the amount of risk that can be diversified away by holding Algonquin Power Utilities and Medical Facilities in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Medical Facilities 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 Medical Facilities. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Medical Facilities has no effect on the direction of Algonquin Power i.e., Algonquin Power and Medical Facilities go up and down completely randomly.
Pair Corralation between Algonquin Power and Medical Facilities
Assuming the 90 days trading horizon Algonquin Power is expected to generate 2.5 times less return on investment than Medical Facilities. But when comparing it to its historical volatility, Algonquin Power Utilities is 1.73 times less risky than Medical Facilities. It trades about 0.12 of its potential returns per unit of risk. Medical Facilities is currently generating about 0.17 of returns per unit of risk over similar time horizon. If you would invest 1,450 in Medical Facilities on September 1, 2024 and sell it today you would earn a total of 120.00 from holding Medical Facilities or generate 8.28% 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. Medical Facilities
Performance |
| Timeline |
| Algonquin Power Utilities |
| Medical Facilities |
Algonquin Power and Medical Facilities Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Algonquin Power and Medical Facilities
The main advantage of trading using opposite Algonquin Power and Medical Facilities positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Algonquin Power position performs unexpectedly, Medical Facilities 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 Medical Facilities will offset losses from the drop in Medical Facilities' long position.| Algonquin Power vs. Fortis Inc | Algonquin Power vs. Enbridge | Algonquin Power vs. Telus Corp | Algonquin Power vs. Brookfield Renewable Partners |
| Medical Facilities vs. Extendicare | Medical Facilities vs. Sienna Senior Living | Medical Facilities vs. Chemtrade Logistics Income | Medical Facilities vs. iShares Canadian HYBrid |
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 Equity Search module to search for actively traded equities including funds and ETFs from over 30 global markets.
Other Complementary Tools
| Equity Forecasting Use basic forecasting models to generate price predictions and determine price momentum | |
| Sectors List of equity sectors categorizing publicly traded companies based on their primary business activities | |
| Portfolio File Import Quickly import all of your third-party portfolios from your local drive in csv format | |
| Instant Ratings Determine any equity ratings based on digital recommendations. Macroaxis instant equity ratings are based on combination of fundamental analysis and risk-adjusted market performance | |
| Risk-Return Analysis View associations between returns expected from investment and the risk you assume |