Correlation Between Atlantica Sustainable and TransAlta Corp
Can any of the company-specific risk be diversified away by investing in both Atlantica Sustainable and TransAlta Corp 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 Atlantica Sustainable and TransAlta Corp into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Atlantica Sustainable Infrastructure and TransAlta Corp, you can compare the effects of market volatilities on Atlantica Sustainable and TransAlta Corp 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 Atlantica Sustainable with a short position of TransAlta Corp. Check out your portfolio center. Please also check ongoing floating volatility patterns of Atlantica Sustainable and TransAlta Corp.
Diversification Opportunities for Atlantica Sustainable and TransAlta Corp
0.81 | Correlation Coefficient |
Very poor diversification
The 3 months correlation between Atlantica and TransAlta is 0.81. Overlapping area represents the amount of risk that can be diversified away by holding Atlantica Sustainable Infrastr and TransAlta Corp in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on TransAlta Corp and Atlantica Sustainable 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 Atlantica Sustainable Infrastructure are associated (or correlated) with TransAlta Corp. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of TransAlta Corp has no effect on the direction of Atlantica Sustainable i.e., Atlantica Sustainable and TransAlta Corp go up and down completely randomly.
Pair Corralation between Atlantica Sustainable and TransAlta Corp
Allowing for the 90-day total investment horizon Atlantica Sustainable is expected to generate 7.86 times less return on investment than TransAlta Corp. But when comparing it to its historical volatility, Atlantica Sustainable Infrastructure is 41.53 times less risky than TransAlta Corp. It trades about 0.54 of its potential returns per unit of risk. TransAlta Corp is currently generating about 0.1 of returns per unit of risk over similar time horizon. If you would invest 1,021 in TransAlta Corp on August 27, 2024 and sell it today you would earn a total of 58.00 from holding TransAlta Corp or generate 5.68% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Strong |
| Accuracy | 100.0% |
| Values | Daily Returns |
Atlantica Sustainable Infrastr vs. TransAlta Corp
Performance |
| Timeline |
| Atlantica Sustainable |
| TransAlta Corp |
Atlantica Sustainable and TransAlta Corp Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Atlantica Sustainable and TransAlta Corp
The main advantage of trading using opposite Atlantica Sustainable and TransAlta Corp positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Atlantica Sustainable position performs unexpectedly, TransAlta Corp 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 Corp will offset losses from the drop in TransAlta Corp's long position.| Atlantica Sustainable vs. Clearway Energy | Atlantica Sustainable vs. Brookfield Renewable Corp | Atlantica Sustainable vs. Nextera Energy Partners | Atlantica Sustainable vs. Brookfield Renewable Partners |
| TransAlta Corp vs. Pampa Energia SA | TransAlta Corp vs. Vistra Energy Corp | TransAlta Corp vs. NRG Energy | TransAlta Corp vs. Power Assets Holdings |
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 Idea Breakdown module to analyze constituents of all Macroaxis ideas. Macroaxis investment ideas are predefined, sector-focused investing themes.
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