Correlation Between Algonquin Power and Prime Dividend
Can any of the company-specific risk be diversified away by investing in both Algonquin Power and Prime Dividend 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 Prime Dividend 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 Prime Dividend Corp, you can compare the effects of market volatilities on Algonquin Power and Prime Dividend 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 Prime Dividend. Check out your portfolio center. Please also check ongoing floating volatility patterns of Algonquin Power and Prime Dividend.
Diversification Opportunities for Algonquin Power and Prime Dividend
-0.25 | Correlation Coefficient |
Very good diversification
The 3 months correlation between Algonquin and Prime is -0.25. Overlapping area represents the amount of risk that can be diversified away by holding Algonquin Power Utilities and Prime Dividend Corp in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Prime Dividend Corp 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 Prime Dividend. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Prime Dividend Corp has no effect on the direction of Algonquin Power i.e., Algonquin Power and Prime Dividend go up and down completely randomly.
Pair Corralation between Algonquin Power and Prime Dividend
Assuming the 90 days trading horizon Algonquin Power Utilities is expected to generate 0.61 times more return on investment than Prime Dividend. However, Algonquin Power Utilities is 1.64 times less risky than Prime Dividend. It trades about 0.05 of its potential returns per unit of risk. Prime Dividend Corp is currently generating about -0.08 per unit of risk. If you would invest 634.00 in Algonquin Power Utilities on October 24, 2024 and sell it today you would earn a total of 8.00 from holding Algonquin Power Utilities or generate 1.26% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Insignificant |
| Accuracy | 100.0% |
| Values | Daily Returns |
Algonquin Power Utilities vs. Prime Dividend Corp
Performance |
| Timeline |
| Algonquin Power Utilities |
| Prime Dividend Corp |
Algonquin Power and Prime Dividend Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Algonquin Power and Prime Dividend
The main advantage of trading using opposite Algonquin Power and Prime Dividend positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Algonquin Power position performs unexpectedly, Prime Dividend 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 Prime Dividend will offset losses from the drop in Prime Dividend's long position.| Algonquin Power vs. Fortis Inc | Algonquin Power vs. Enbridge | Algonquin Power vs. Telus Corp | Algonquin Power vs. Brookfield Renewable Partners |
| Prime Dividend vs. TDb Split Corp | Prime Dividend vs. Dividend Select 15 | Prime Dividend vs. Canadian Life Companies | Prime Dividend vs. Brompton Lifeco Split |
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 Insider Screener module to find insiders across different sectors to evaluate their impact on performance.
Other Complementary Tools
| Options Analysis Analyze and evaluate options and option chains as a potential hedge for your portfolios | |
| Latest Portfolios Quick portfolio dashboard that showcases your latest portfolios | |
| Correlation Analysis Reduce portfolio risk simply by holding instruments which are not perfectly correlated | |
| Portfolio Comparator Compare the composition, asset allocations and performance of any two portfolios in your account | |
| CEOs Directory Screen CEOs from public companies around the world |