Correlation Between Algonquin Power and Advent Technologies
Can any of the company-specific risk be diversified away by investing in both Algonquin Power and Advent Technologies 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 Advent Technologies 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 Advent Technologies Holdings, you can compare the effects of market volatilities on Algonquin Power and Advent Technologies 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 Advent Technologies. Check out your portfolio center. Please also check ongoing floating volatility patterns of Algonquin Power and Advent Technologies.
Diversification Opportunities for Algonquin Power and Advent Technologies
0.07 | Correlation Coefficient |
Significant diversification
The 3 months correlation between Algonquin and Advent is 0.07. Overlapping area represents the amount of risk that can be diversified away by holding Algonquin Power Utilities and Advent Technologies Holdings in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Advent Technologies 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 Advent Technologies. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Advent Technologies has no effect on the direction of Algonquin Power i.e., Algonquin Power and Advent Technologies go up and down completely randomly.
Pair Corralation between Algonquin Power and Advent Technologies
Considering the 90-day investment horizon Algonquin Power Utilities is expected to generate 0.23 times more return on investment than Advent Technologies. However, Algonquin Power Utilities is 4.33 times less risky than Advent Technologies. It trades about -0.03 of its potential returns per unit of risk. Advent Technologies Holdings is currently generating about -0.02 per unit of risk. If you would invest 674.00 in Algonquin Power Utilities on November 19, 2024 and sell it today you would lose (190.00) from holding Algonquin Power Utilities or give up 28.19% of portfolio value over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Insignificant |
| Accuracy | 100.0% |
| Values | Daily Returns |
Algonquin Power Utilities vs. Advent Technologies Holdings
Performance |
| Timeline |
| Algonquin Power Utilities |
| Advent Technologies |
Algonquin Power and Advent Technologies Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Algonquin Power and Advent Technologies
The main advantage of trading using opposite Algonquin Power and Advent Technologies positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Algonquin Power position performs unexpectedly, Advent Technologies 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 Advent Technologies will offset losses from the drop in Advent Technologies' long position.| Algonquin Power vs. Brookfield Renewable Corp | Algonquin Power vs. Clearway Energy Class | Algonquin Power vs. Clearway Energy | Algonquin Power vs. Brookfield Renewable Partners |
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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 Correlation Analysis module to reduce portfolio risk simply by holding instruments which are not perfectly correlated.
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