Correlation Between Algonquin Power and JEMTEC
Can any of the company-specific risk be diversified away by investing in both Algonquin Power and JEMTEC 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 JEMTEC 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 JEMTEC Inc, you can compare the effects of market volatilities on Algonquin Power and JEMTEC 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 JEMTEC. Check out your portfolio center. Please also check ongoing floating volatility patterns of Algonquin Power and JEMTEC.
Diversification Opportunities for Algonquin Power and JEMTEC
-0.75 | Correlation Coefficient |
Pay attention - limited upside
The 3 months correlation between Algonquin and JEMTEC is -0.75. Overlapping area represents the amount of risk that can be diversified away by holding Algonquin Power Utilities and JEMTEC Inc in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on JEMTEC Inc 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 JEMTEC. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of JEMTEC Inc has no effect on the direction of Algonquin Power i.e., Algonquin Power and JEMTEC go up and down completely randomly.
Pair Corralation between Algonquin Power and JEMTEC
Assuming the 90 days trading horizon Algonquin Power Utilities is expected to under-perform the JEMTEC. But the stock apears to be less risky and, when comparing its historical volatility, Algonquin Power Utilities is 3.09 times less risky than JEMTEC. The stock trades about -0.09 of its potential returns per unit of risk. The JEMTEC Inc is currently generating about 0.08 of returns per unit of risk over similar time horizon. If you would invest 81.00 in JEMTEC Inc on September 13, 2024 and sell it today you would earn a total of 5.00 from holding JEMTEC Inc or generate 6.17% 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. JEMTEC Inc
Performance |
| Timeline |
| Algonquin Power Utilities |
| JEMTEC Inc |
Algonquin Power and JEMTEC Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Algonquin Power and JEMTEC
The main advantage of trading using opposite Algonquin Power and JEMTEC positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Algonquin Power position performs unexpectedly, JEMTEC 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 JEMTEC will offset losses from the drop in JEMTEC's long position.| Algonquin Power vs. Fortis Inc | Algonquin Power vs. Enbridge | Algonquin Power vs. Telus Corp | Algonquin Power vs. Brookfield Renewable Partners |
| JEMTEC vs. Goodfood Market Corp | JEMTEC vs. Cogeco Communications | JEMTEC vs. CVW CleanTech | JEMTEC vs. Verizon Communications 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 Fundamental Analysis module to view fundamental data based on most recent published financial statements.
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