Correlation Between Falcon Energy and Algonquin Power
Can any of the company-specific risk be diversified away by investing in both Falcon Energy 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 Falcon Energy and Algonquin Power into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Falcon Energy Materials and Algonquin Power Utilities, you can compare the effects of market volatilities on Falcon Energy 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 Falcon Energy with a short position of Algonquin Power. Check out your portfolio center. Please also check ongoing floating volatility patterns of Falcon Energy and Algonquin Power.
Diversification Opportunities for Falcon Energy and Algonquin Power
-0.28 | Correlation Coefficient |
Very good diversification
The 3 months correlation between Falcon and Algonquin is -0.28. Overlapping area represents the amount of risk that can be diversified away by holding Falcon Energy Materials 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 Falcon Energy 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 Falcon Energy Materials 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 Falcon Energy i.e., Falcon Energy and Algonquin Power go up and down completely randomly.
Pair Corralation between Falcon Energy and Algonquin Power
Assuming the 90 days trading horizon Falcon Energy Materials is expected to under-perform the Algonquin Power. In addition to that, Falcon Energy is 12.13 times more volatile than Algonquin Power Utilities. It trades about -0.01 of its total potential returns per unit of risk. Algonquin Power Utilities is currently generating about 0.69 per unit of volatility. If you would invest 2,245 in Algonquin Power Utilities on September 12, 2024 and sell it today you would earn a total of 139.00 from holding Algonquin Power Utilities or generate 6.19% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Insignificant |
| Accuracy | 100.0% |
| Values | Daily Returns |
Falcon Energy Materials vs. Algonquin Power Utilities
Performance |
| Timeline |
| Falcon Energy Materials |
| Algonquin Power Utilities |
Falcon Energy and Algonquin Power Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Falcon Energy and Algonquin Power
The main advantage of trading using opposite Falcon Energy and Algonquin Power positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Falcon Energy 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.| Falcon Energy vs. Advent Wireless | Falcon Energy vs. Guru Organic Energy | Falcon Energy vs. Boat Rocker Media | Falcon Energy vs. Maple Leaf Foods |
| Algonquin Power vs. Microsoft Corp CDR | Algonquin Power vs. Apple Inc CDR | Algonquin Power vs. Alphabet Inc CDR | Algonquin Power vs. Amazon CDR |
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 Portfolio Optimization module to compute new portfolio that will generate highest expected return given your specified tolerance for risk.
Other Complementary Tools
| Portfolio Rebalancing Analyze risk-adjusted returns against different time horizons to find asset-allocation targets | |
| Volatility Analysis Get historical volatility and risk analysis based on latest market data | |
| Funds Screener Find actively-traded funds from around the world traded on over 30 global exchanges | |
| Bond Analysis Evaluate and analyze corporate bonds as a potential investment for your portfolios. | |
| Insider Screener Find insiders across different sectors to evaluate their impact on performance |