Correlation Between Algonquin Power and Stingray
Can any of the company-specific risk be diversified away by investing in both Algonquin Power and Stingray 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 Stingray 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 Stingray Group, you can compare the effects of market volatilities on Algonquin Power and Stingray 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 Stingray. Check out your portfolio center. Please also check ongoing floating volatility patterns of Algonquin Power and Stingray.
Diversification Opportunities for Algonquin Power and Stingray
-0.59 | Correlation Coefficient |
Excellent diversification
The 3 months correlation between Algonquin and Stingray is -0.59. Overlapping area represents the amount of risk that can be diversified away by holding Algonquin Power Utilities and Stingray Group in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Stingray Group 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 Stingray. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Stingray Group has no effect on the direction of Algonquin Power i.e., Algonquin Power and Stingray go up and down completely randomly.
Pair Corralation between Algonquin Power and Stingray
Assuming the 90 days trading horizon Algonquin Power is expected to generate 1.63 times less return on investment than Stingray. But when comparing it to its historical volatility, Algonquin Power Utilities is 1.24 times less risky than Stingray. It trades about 0.11 of its potential returns per unit of risk. Stingray Group is currently generating about 0.15 of returns per unit of risk over similar time horizon. If you would invest 755.00 in Stingray Group on September 4, 2024 and sell it today you would earn a total of 40.00 from holding Stingray Group or generate 5.3% 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. Stingray Group
Performance |
| Timeline |
| Algonquin Power Utilities |
| Stingray Group |
Algonquin Power and Stingray Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Algonquin Power and Stingray
The main advantage of trading using opposite Algonquin Power and Stingray positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Algonquin Power position performs unexpectedly, Stingray 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 Stingray will offset losses from the drop in Stingray's long position.| Algonquin Power vs. Fortis Inc | Algonquin Power vs. Enbridge | Algonquin Power vs. Telus Corp | Algonquin Power vs. Brookfield Renewable Partners |
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 Bond Analysis module to evaluate and analyze corporate bonds as a potential investment for your portfolios..
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