Correlation Between Algonquin Power and Argo Group
Can any of the company-specific risk be diversified away by investing in both Algonquin Power and Argo Group 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 Argo Group 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 Argo Group 65, you can compare the effects of market volatilities on Algonquin Power and Argo Group 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 Argo Group. Check out your portfolio center. Please also check ongoing floating volatility patterns of Algonquin Power and Argo Group.
Diversification Opportunities for Algonquin Power and Argo Group
-0.3 | Correlation Coefficient |
Very good diversification
The 3 months correlation between Algonquin and Argo is -0.3. Overlapping area represents the amount of risk that can be diversified away by holding Algonquin Power Utilities and Argo Group 65 in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Argo Group 65 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 Argo Group. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Argo Group 65 has no effect on the direction of Algonquin Power i.e., Algonquin Power and Argo Group go up and down completely randomly.
Pair Corralation between Algonquin Power and Argo Group
Given the investment horizon of 90 days Algonquin Power Utilities is expected to generate 0.75 times more return on investment than Argo Group. However, Algonquin Power Utilities is 1.33 times less risky than Argo Group. It trades about 0.08 of its potential returns per unit of risk. Argo Group 65 is currently generating about 0.03 per unit of risk. If you would invest 2,037 in Algonquin Power Utilities on November 29, 2024 and sell it today you would earn a total of 553.00 from holding Algonquin Power Utilities or generate 27.15% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Insignificant |
| Accuracy | 99.8% |
| Values | Daily Returns |
Algonquin Power Utilities vs. Argo Group 65
Performance |
| Timeline |
| Algonquin Power Utilities |
| Argo Group 65 |
Algonquin Power and Argo Group Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Algonquin Power and Argo Group
The main advantage of trading using opposite Algonquin Power and Argo Group positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Algonquin Power position performs unexpectedly, Argo Group 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 Argo Group will offset losses from the drop in Argo Group's long position.| Algonquin Power vs. CMS Energy Corp | Algonquin Power vs. American Financial Group | Algonquin Power vs. Argo Group 65 | Algonquin Power vs. Aegon Funding |
| Argo Group vs. Brighthouse Financial | Argo Group vs. American Financial Group | Argo Group vs. CMS Energy Corp | Argo Group vs. Aegon Funding |
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 Volatility Analysis module to get historical volatility and risk analysis based on latest market data.
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