Correlation Between Canadian Utilities and Algonquin Power
Can any of the company-specific risk be diversified away by investing in both Canadian Utilities and Algonquin 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 Canadian Utilities and Algonquin Power into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Canadian Utilities Limited and Algonquin Power Utilities, you can compare the effects of market volatilities on Canadian Utilities and Algonquin 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 Canadian Utilities with a short position of Algonquin Power. Check out your portfolio center. Please also check ongoing floating volatility patterns of Canadian Utilities and Algonquin Power.
Diversification Opportunities for Canadian Utilities and Algonquin Power
0.19 | Correlation Coefficient |
Average diversification
The 3 months correlation between Canadian and Algonquin is 0.19. Overlapping area represents the amount of risk that can be diversified away by holding Canadian Utilities Limited and Algonquin Power Utilities in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Algonquin Power Utilities and Canadian Utilities 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 Canadian Utilities Limited are associated (or correlated) with Algonquin Power. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Algonquin Power Utilities has no effect on the direction of Canadian Utilities i.e., Canadian Utilities and Algonquin Power go up and down completely randomly.
Pair Corralation between Canadian Utilities and Algonquin Power
Assuming the 90 days horizon Canadian Utilities Limited is expected to generate 1.5 times more return on investment than Algonquin Power. However, Canadian Utilities is 1.5 times more volatile than Algonquin Power Utilities. It trades about 0.02 of its potential returns per unit of risk. Algonquin Power Utilities is currently generating about -0.04 per unit of risk. If you would invest 3,560 in Canadian Utilities Limited on August 29, 2024 and sell it today you would earn a total of 11.00 from holding Canadian Utilities Limited or generate 0.31% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Insignificant |
| Accuracy | 95.65% |
| Values | Daily Returns |
Canadian Utilities Limited vs. Algonquin Power Utilities
Performance |
| Timeline |
| Canadian Utilities |
| Algonquin Power Utilities |
Canadian Utilities and Algonquin Power Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Canadian Utilities and Algonquin Power
The main advantage of trading using opposite Canadian Utilities and Algonquin Power positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Canadian Utilities position performs unexpectedly, Algonquin 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 Algonquin Power will offset losses from the drop in Algonquin Power's long position.| Canadian Utilities vs. Innergex Renewable Energy | Canadian Utilities vs. Northland Power | Canadian Utilities vs. Capital Power | Canadian Utilities vs. Brookfield Renewable Partners |
| Algonquin Power vs. Forstrong Global Income | Algonquin Power vs. Terreno Resources Corp | Algonquin Power vs. iShares Canadian HYBrid | Algonquin Power vs. Brompton European Dividend |
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 Commodity Channel module to use Commodity Channel Index to analyze current equity momentum.
Other Complementary Tools
| Portfolio Anywhere Track or share privately all of your investments from the convenience of any device | |
| Aroon Oscillator Analyze current equity momentum using Aroon Oscillator and other momentum ratios | |
| Stock Tickers Use high-impact, comprehensive, and customizable stock tickers that can be easily integrated to any websites | |
| Cryptocurrency Center Build and monitor diversified portfolio of extremely risky digital assets and cryptocurrency | |
| Money Flow Index Determine momentum by analyzing Money Flow Index and other technical indicators |