Correlation Between Cadiz Depositary and Allete
Can any of the company-specific risk be diversified away by investing in both Cadiz Depositary and Allete 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 Cadiz Depositary and Allete into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Cadiz Depositary Shares and Allete Inc, you can compare the effects of market volatilities on Cadiz Depositary and Allete 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 Cadiz Depositary with a short position of Allete. Check out your portfolio center. Please also check ongoing floating volatility patterns of Cadiz Depositary and Allete.
Diversification Opportunities for Cadiz Depositary and Allete
0.82 | Correlation Coefficient |
Very poor diversification
The 3 months correlation between Cadiz and Allete is 0.82. Overlapping area represents the amount of risk that can be diversified away by holding Cadiz Depositary Shares and Allete Inc in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Allete Inc and Cadiz Depositary 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 Cadiz Depositary Shares are associated (or correlated) with Allete. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Allete Inc has no effect on the direction of Cadiz Depositary i.e., Cadiz Depositary and Allete go up and down completely randomly.
Pair Corralation between Cadiz Depositary and Allete
Assuming the 90 days horizon Cadiz Depositary Shares is expected to generate 2.49 times more return on investment than Allete. However, Cadiz Depositary is 2.49 times more volatile than Allete Inc. It trades about 0.07 of its potential returns per unit of risk. Allete Inc is currently generating about 0.02 per unit of risk. If you would invest 756.00 in Cadiz Depositary Shares on August 30, 2024 and sell it today you would earn a total of 935.00 from holding Cadiz Depositary Shares or generate 123.68% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Strong |
| Accuracy | 100.0% |
| Values | Daily Returns |
Cadiz Depositary Shares vs. Allete Inc
Performance |
| Timeline |
| Cadiz Depositary Shares |
| Allete Inc |
Cadiz Depositary and Allete Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Cadiz Depositary and Allete
The main advantage of trading using opposite Cadiz Depositary and Allete positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Cadiz Depositary position performs unexpectedly, Allete 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 Allete will offset losses from the drop in Allete's long position.| Cadiz Depositary vs. Atlanticus Holdings Corp | Cadiz Depositary vs. LifeMD Preferred Series | Cadiz Depositary vs. Aquagold International | Cadiz Depositary vs. Morningstar Unconstrained Allocation |
| Allete vs. Avista | Allete vs. Black Hills | Allete vs. Montauk Renewables | Allete 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 Headlines Timeline module to stay connected to all market stories and filter out noise. Drill down to analyze hype elasticity.
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