Correlation Between Algonquin Power and Spark Power
Can any of the company-specific risk be diversified away by investing in both Algonquin Power and Spark Power 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 Spark Power 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 Spark Power Group, you can compare the effects of market volatilities on Algonquin Power and Spark Power 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 Spark Power. Check out your portfolio center. Please also check ongoing floating volatility patterns of Algonquin Power and Spark Power.
Diversification Opportunities for Algonquin Power and Spark Power
-0.15 | Correlation Coefficient |
Good diversification
The 3 months correlation between Algonquin and Spark is -0.15. Overlapping area represents the amount of risk that can be diversified away by holding Algonquin Power Utilities and Spark Power Group in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Spark Power 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 Spark Power. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Spark Power Group has no effect on the direction of Algonquin Power i.e., Algonquin Power and Spark Power go up and down completely randomly.
Pair Corralation between Algonquin Power and Spark Power
If you would invest 27.00 in Spark Power Group on November 4, 2024 and sell it today you would earn a total of 0.00 from holding Spark Power Group or generate 0.0% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Insignificant |
| Accuracy | 100.0% |
| Values | Daily Returns |
Algonquin Power Utilities vs. Spark Power Group
Performance |
| Timeline |
| Algonquin Power Utilities |
Risk-Adjusted Performance
0 of 100
Weak | Strong |
Very Weak
| Spark Power Group |
Risk-Adjusted Performance
0 of 100
Weak | Strong |
Very Weak
Algonquin Power and Spark Power Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Algonquin Power and Spark Power
The main advantage of trading using opposite Algonquin Power and Spark Power positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Algonquin Power position performs unexpectedly, Spark Power 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 Spark Power will offset losses from the drop in Spark Power's long position.| Algonquin Power vs. SiriusPoint | Algonquin Power vs. Brightspire Capital | Algonquin Power vs. RLJ Lodging Trust | Algonquin Power vs. Harrow Health 8625 |
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 Investing Opportunities module to build portfolios using our predefined set of ideas and optimize them against your investing preferences.
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