Correlation Between Avista and Otter Tail
Can any of the company-specific risk be diversified away by investing in both Avista 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 Avista and Otter Tail into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Avista and Otter Tail, you can compare the effects of market volatilities on Avista 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 Avista with a short position of Otter Tail. Check out your portfolio center. Please also check ongoing floating volatility patterns of Avista and Otter Tail.
Diversification Opportunities for Avista and Otter Tail
0.28 | Correlation Coefficient |
Modest diversification
The 3 months correlation between Avista and Otter is 0.28. Overlapping area represents the amount of risk that can be diversified away by holding Avista and Otter Tail in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Otter Tail and Avista 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 Avista 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 Avista i.e., Avista and Otter Tail go up and down completely randomly.
Pair Corralation between Avista and Otter Tail
Considering the 90-day investment horizon Avista is expected to generate 1.31 times less return on investment than Otter Tail. But when comparing it to its historical volatility, Avista is 1.57 times less risky than Otter Tail. It trades about 0.1 of its potential returns per unit of risk. Otter Tail is currently generating about 0.08 of returns per unit of risk over similar time horizon. If you would invest 7,928 in Otter Tail on August 28, 2024 and sell it today you would earn a total of 266.00 from holding Otter Tail or generate 3.36% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Very Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
Avista vs. Otter Tail
Performance |
| Timeline |
| Avista |
| Otter Tail |
Avista and Otter Tail Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Avista and Otter Tail
The main advantage of trading using opposite Avista and Otter Tail positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Avista 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.| Avista vs. Allete Inc | Avista vs. Black Hills | Avista vs. Montauk Renewables | Avista vs. Companhia Paranaense de |
| Otter Tail vs. NorthWestern | Otter Tail vs. Avista | Otter Tail vs. Black Hills | Otter Tail vs. Companhia Paranaense de |
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 Insider Screener module to find insiders across different sectors to evaluate their impact on performance.
Other Complementary Tools
| Idea Breakdown Analyze constituents of all Macroaxis ideas. Macroaxis investment ideas are predefined, sector-focused investing themes | |
| My Watchlist Analysis Analyze my current watchlist and to refresh optimization strategy. Macroaxis watchlist is based on self-learning algorithm to remember stocks you like | |
| Options Analysis Analyze and evaluate options and option chains as a potential hedge for your portfolios | |
| Global Correlations Find global opportunities by holding instruments from different markets | |
| Sign In To Macroaxis Sign in to explore Macroaxis' wealth optimization platform and fintech modules |