Correlation Between AuraSource and Otter Tail
Can any of the company-specific risk be diversified away by investing in both AuraSource and Otter Tail 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 AuraSource and Otter Tail into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between AuraSource and Otter Tail, you can compare the effects of market volatilities on AuraSource and Otter Tail 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 AuraSource with a short position of Otter Tail. Check out your portfolio center. Please also check ongoing floating volatility patterns of AuraSource and Otter Tail.
Diversification Opportunities for AuraSource and Otter Tail
-0.18 | Correlation Coefficient |
Good diversification
The 3 months correlation between AuraSource and Otter is -0.18. Overlapping area represents the amount of risk that can be diversified away by holding AuraSource and Otter Tail in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Otter Tail and AuraSource 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 AuraSource are associated (or correlated) with Otter Tail. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Otter Tail has no effect on the direction of AuraSource i.e., AuraSource and Otter Tail go up and down completely randomly.
Pair Corralation between AuraSource and Otter Tail
Given the investment horizon of 90 days AuraSource is expected to under-perform the Otter Tail. In addition to that, AuraSource is 9.87 times more volatile than Otter Tail. It trades about -0.21 of its total potential returns per unit of risk. Otter Tail is currently generating about 0.08 per unit of volatility. If you would invest 7,806 in Otter Tail on September 1, 2024 and sell it today you would earn a total of 258.00 from holding Otter Tail or generate 3.31% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Insignificant |
| Accuracy | 95.45% |
| Values | Daily Returns |
AuraSource vs. Otter Tail
Performance |
| Timeline |
| AuraSource |
| Otter Tail |
AuraSource and Otter Tail Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with AuraSource and Otter Tail
The main advantage of trading using opposite AuraSource and Otter Tail positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if AuraSource position performs unexpectedly, Otter Tail 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 Otter Tail will offset losses from the drop in Otter Tail's long position.| AuraSource vs. Energy of Minas | AuraSource vs. Canadian Utilities Limited | AuraSource vs. NorthWestern | AuraSource vs. Allete Inc |
| Otter Tail vs. Companhia Paranaense de | Otter Tail vs. The AES | Otter Tail vs. Allete Inc | Otter Tail vs. Avista |
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 USA ETFs module to find actively traded Exchange Traded Funds (ETF) in USA.
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