Correlation Between Enlight Renewable and Algonquin Power
Can any of the company-specific risk be diversified away by investing in both Enlight Renewable 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 Enlight Renewable and Algonquin Power into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Enlight Renewable Energy and Algonquin Power Utilities, you can compare the effects of market volatilities on Enlight Renewable 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 Enlight Renewable with a short position of Algonquin Power. Check out your portfolio center. Please also check ongoing floating volatility patterns of Enlight Renewable and Algonquin Power.
Diversification Opportunities for Enlight Renewable and Algonquin Power
-0.22 | Correlation Coefficient |
Very good diversification
The 3 months correlation between Enlight and Algonquin is -0.22. Overlapping area represents the amount of risk that can be diversified away by holding Enlight Renewable Energy 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 Enlight Renewable 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 Enlight Renewable Energy 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 Enlight Renewable i.e., Enlight Renewable and Algonquin Power go up and down completely randomly.
Pair Corralation between Enlight Renewable and Algonquin Power
Given the investment horizon of 90 days Enlight Renewable Energy is expected to generate 1.38 times more return on investment than Algonquin Power. However, Enlight Renewable is 1.38 times more volatile than Algonquin Power Utilities. It trades about 0.0 of its potential returns per unit of risk. Algonquin Power Utilities is currently generating about -0.05 per unit of risk. If you would invest 1,911 in Enlight Renewable Energy on August 31, 2024 and sell it today you would lose (227.00) from holding Enlight Renewable Energy or give up 11.88% of portfolio value over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Insignificant |
| Accuracy | 68.98% |
| Values | Daily Returns |
Enlight Renewable Energy vs. Algonquin Power Utilities
Performance |
| Timeline |
| Enlight Renewable Energy |
| Algonquin Power Utilities |
Risk-Adjusted Performance
0 of 100
Weak | Strong |
Very Weak
Enlight Renewable and Algonquin Power Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Enlight Renewable and Algonquin Power
The main advantage of trading using opposite Enlight Renewable and Algonquin Power positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Enlight Renewable 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.| Enlight Renewable vs. Verde Clean Fuels | Enlight Renewable vs. Eco Wave Power | Enlight Renewable vs. Fluence Energy | Enlight Renewable vs. Advent Technologies Holdings |
| Algonquin Power vs. SiriusPoint | Algonquin Power vs. Brightspire Capital | Algonquin Power vs. RLJ Lodging Trust | Algonquin Power vs. Harrow Health 8625 |
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 Premium Stories module to follow Macroaxis premium stories from verified contributors across different equity types, categories and coverage scope.
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