Correlation Between Algonquin Power and New Pacific
Can any of the company-specific risk be diversified away by investing in both Algonquin Power and New Pacific 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 New Pacific 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 New Pacific Metals, you can compare the effects of market volatilities on Algonquin Power and New Pacific 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 New Pacific. Check out your portfolio center. Please also check ongoing floating volatility patterns of Algonquin Power and New Pacific.
Diversification Opportunities for Algonquin Power and New Pacific
-0.49 | Correlation Coefficient |
Very good diversification
The 3 months correlation between Algonquin and New is -0.49. Overlapping area represents the amount of risk that can be diversified away by holding Algonquin Power Utilities and New Pacific Metals in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on New Pacific Metals 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 New Pacific. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of New Pacific Metals has no effect on the direction of Algonquin Power i.e., Algonquin Power and New Pacific go up and down completely randomly.
Pair Corralation between Algonquin Power and New Pacific
Assuming the 90 days trading horizon Algonquin Power Utilities is expected to under-perform the New Pacific. But the stock apears to be less risky and, when comparing its historical volatility, Algonquin Power Utilities is 2.08 times less risky than New Pacific. The stock trades about -0.09 of its potential returns per unit of risk. The New Pacific Metals is currently generating about 0.09 of returns per unit of risk over similar time horizon. If you would invest 212.00 in New Pacific Metals on September 13, 2024 and sell it today you would earn a total of 12.00 from holding New Pacific Metals or generate 5.66% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Very Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
Algonquin Power Utilities vs. New Pacific Metals
Performance |
| Timeline |
| Algonquin Power Utilities |
| New Pacific Metals |
Algonquin Power and New Pacific Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Algonquin Power and New Pacific
The main advantage of trading using opposite Algonquin Power and New Pacific positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Algonquin Power position performs unexpectedly, New Pacific 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 New Pacific will offset losses from the drop in New Pacific's long position.| Algonquin Power vs. Fortis Inc | Algonquin Power vs. Enbridge | Algonquin Power vs. Telus Corp | Algonquin Power vs. Brookfield Renewable Partners |
| New Pacific vs. SilverCrest Metals | New Pacific vs. Skeena Resources | New Pacific vs. Ascot Resources | New Pacific vs. Orla Mining |
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 Theme Ratings module to determine theme ratings based on digital equity recommendations. Macroaxis theme ratings are based on combination of fundamental analysis and risk-adjusted market performance.
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