Correlation Between Algonquin Power and Ellomay Capital
Can any of the company-specific risk be diversified away by investing in both Algonquin Power and Ellomay Capital 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 Ellomay Capital 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 Ellomay Capital, you can compare the effects of market volatilities on Algonquin Power and Ellomay Capital 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 Ellomay Capital. Check out your portfolio center. Please also check ongoing floating volatility patterns of Algonquin Power and Ellomay Capital.
Diversification Opportunities for Algonquin Power and Ellomay Capital
-0.75 | Correlation Coefficient |
Pay attention - limited upside
The 3 months correlation between Algonquin and Ellomay is -0.75. Overlapping area represents the amount of risk that can be diversified away by holding Algonquin Power Utilities and Ellomay Capital in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Ellomay Capital 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 Ellomay Capital. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Ellomay Capital has no effect on the direction of Algonquin Power i.e., Algonquin Power and Ellomay Capital go up and down completely randomly.
Pair Corralation between Algonquin Power and Ellomay Capital
Considering the 90-day investment horizon Algonquin Power Utilities is expected to under-perform the Ellomay Capital. But the stock apears to be less risky and, when comparing its historical volatility, Algonquin Power Utilities is 1.72 times less risky than Ellomay Capital. The stock trades about -0.02 of its potential returns per unit of risk. The Ellomay Capital is currently generating about 0.03 of returns per unit of risk over similar time horizon. If you would invest 1,438 in Ellomay Capital on August 28, 2024 and sell it today you would earn a total of 211.00 from holding Ellomay Capital or generate 14.67% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Weak |
| Accuracy | 96.97% |
| Values | Daily Returns |
Algonquin Power Utilities vs. Ellomay Capital
Performance |
| Timeline |
| Algonquin Power Utilities |
| Ellomay Capital |
Algonquin Power and Ellomay Capital Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Algonquin Power and Ellomay Capital
The main advantage of trading using opposite Algonquin Power and Ellomay Capital positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Algonquin Power position performs unexpectedly, Ellomay Capital 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 Ellomay Capital will offset losses from the drop in Ellomay Capital's long position.| Algonquin Power vs. Brookfield Renewable Corp | Algonquin Power vs. Nextera Energy Partners | Algonquin Power vs. Clearway Energy Class | Algonquin Power vs. Atlantica Sustainable Infrastructure |
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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 Price Ceiling Movement module to calculate and plot Price Ceiling Movement for different equity instruments.
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