Correlation Between Fluence Energy and Algonquin Power

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Can any of the company-specific risk be diversified away by investing in both Fluence 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 Fluence 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 Fluence Energy and Algonquin Power Utilities, you can compare the effects of market volatilities on Fluence 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 Fluence Energy with a short position of Algonquin Power. Check out your portfolio center. Please also check ongoing floating volatility patterns of Fluence Energy and Algonquin Power.

Diversification Opportunities for Fluence Energy and Algonquin Power

FluenceAlgonquinDiversified AwayFluenceAlgonquinDiversified Away100%
-0.14
  Correlation Coefficient

Good diversification

The 3 months correlation between Fluence and Algonquin is -0.14. Overlapping area represents the amount of risk that can be diversified away by holding Fluence 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 Fluence 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 Fluence 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 Fluence Energy i.e., Fluence Energy and Algonquin Power go up and down completely randomly.

Pair Corralation between Fluence Energy and Algonquin Power

Given the investment horizon of 90 days Fluence Energy is expected to under-perform the Algonquin Power. In addition to that, Fluence Energy is 6.51 times more volatile than Algonquin Power Utilities. It trades about -0.23 of its total potential returns per unit of risk. Algonquin Power Utilities is currently generating about 0.33 per unit of volatility. If you would invest  441.00  in Algonquin Power Utilities on November 25, 2024 and sell it today you would earn a total of  55.00  from holding Algonquin Power Utilities or generate 12.47% return on investment over 90 days.
Time Period3 Months [change]
DirectionMoves Against 
StrengthInsignificant
Accuracy100.0%
ValuesDaily Returns

Fluence Energy  vs.  Algonquin Power Utilities

 Performance 
JavaScript chart by amCharts 3.21.15Dec2025Feb -60-40-200
JavaScript chart by amCharts 3.21.15FLNC AQN
       Timeline  
Fluence Energy 

Risk-Adjusted Performance

Very Weak

 
Weak
 
Strong
Over the last 90 days Fluence Energy has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of uncertain performance in the last few months, the Stock's basic indicators remain rather sound which may send shares a bit higher in March 2025. The latest tumult may also be a sign of longer-term up-swing for the firm shareholders.
JavaScript chart by amCharts 3.21.15DecJanFebJanFeb101520
Algonquin Power Utilities 

Risk-Adjusted Performance

Insignificant

 
Weak
 
Strong
Compared to the overall equity markets, risk-adjusted returns on investments in Algonquin Power Utilities are ranked lower than 3 (%) of all global equities and portfolios over the last 90 days. In spite of very healthy basic indicators, Algonquin Power is not utilizing all of its potentials. The latest stock price disarray, may contribute to short-term losses for the investors.
JavaScript chart by amCharts 3.21.15DecJanFebJanFeb4.24.34.44.54.64.74.84.95

Fluence Energy and Algonquin Power Volatility Contrast

   Predicted Return Density   
JavaScript chart by amCharts 3.21.15-13.23-9.91-6.59-3.270.02.765.568.3611.16 0.020.040.060.080.100.120.14
JavaScript chart by amCharts 3.21.15FLNC AQN
       Returns  

Pair Trading with Fluence Energy and Algonquin Power

The main advantage of trading using opposite Fluence Energy and Algonquin Power positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Fluence 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.
The idea behind Fluence Energy and Algonquin Power Utilities pairs trading is to make the combined position market-neutral, meaning the overall market's direction will not affect its win or loss (or potential downside or upside). This can be achieved by designing a pairs trade with two highly correlated stocks or equities that operate in a similar space or sector, making it possible to obtain profits through simple and relatively low-risk investment.
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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 Manager module to state of the art Portfolio Manager to monitor and improve performance of your invested capital.

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