Correlation Between Algonquin Power and TransAlta Renewables
Can any of the company-specific risk be diversified away by investing in both Algonquin Power and TransAlta Renewables 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 TransAlta Renewables 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 TransAlta Renewables, you can compare the effects of market volatilities on Algonquin Power and TransAlta Renewables 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 TransAlta Renewables. Check out your portfolio center. Please also check ongoing floating volatility patterns of Algonquin Power and TransAlta Renewables.
Diversification Opportunities for Algonquin Power and TransAlta Renewables
-0.07 | Correlation Coefficient |
Good diversification
The 3 months correlation between Algonquin and TransAlta is -0.07. Overlapping area represents the amount of risk that can be diversified away by holding Algonquin Power Utilities and TransAlta Renewables in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on TransAlta Renewables 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 TransAlta Renewables. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of TransAlta Renewables has no effect on the direction of Algonquin Power i.e., Algonquin Power and TransAlta Renewables go up and down completely randomly.
Pair Corralation between Algonquin Power and TransAlta Renewables
If you would invest 1,020 in TransAlta Renewables on August 28, 2024 and sell it today you would earn a total of 0.00 from holding TransAlta Renewables or generate 0.0% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Insignificant |
| Accuracy | 4.76% |
| Values | Daily Returns |
Algonquin Power Utilities vs. TransAlta Renewables
Performance |
| Timeline |
| Algonquin Power Utilities |
| TransAlta Renewables |
Risk-Adjusted Performance
0 of 100
Weak | Strong |
Very Weak
Algonquin Power and TransAlta Renewables Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Algonquin Power and TransAlta Renewables
The main advantage of trading using opposite Algonquin Power and TransAlta Renewables positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Algonquin Power position performs unexpectedly, TransAlta Renewables 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 TransAlta Renewables will offset losses from the drop in TransAlta Renewables' 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 |
| TransAlta Renewables vs. Green Impact Partners | TransAlta Renewables vs. Algonquin Power Utilities | TransAlta Renewables vs. Renew Energy Global | TransAlta Renewables vs. Excelerate Energy |
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 Exposure Probability module to analyze equity upside and downside potential for a given time horizon across multiple markets.
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