Correlation Between Green Impact and Algonquin Power
Can any of the company-specific risk be diversified away by investing in both Green Impact 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 Green Impact and Algonquin Power into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Green Impact Partners and Algonquin Power Utilities, you can compare the effects of market volatilities on Green Impact 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 Green Impact with a short position of Algonquin Power. Check out your portfolio center. Please also check ongoing floating volatility patterns of Green Impact and Algonquin Power.
Diversification Opportunities for Green Impact and Algonquin Power
0.45 | Correlation Coefficient |
Very weak diversification
The 3 months correlation between Green and Algonquin is 0.45. Overlapping area represents the amount of risk that can be diversified away by holding Green Impact Partners 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 Green Impact 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 Green Impact Partners 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 Green Impact i.e., Green Impact and Algonquin Power go up and down completely randomly.
Pair Corralation between Green Impact and Algonquin Power
Assuming the 90 days horizon Green Impact Partners is expected to generate 2.15 times more return on investment than Algonquin Power. However, Green Impact is 2.15 times more volatile than Algonquin Power Utilities. It trades about 0.04 of its potential returns per unit of risk. Algonquin Power Utilities is currently generating about -0.08 per unit of risk. If you would invest 210.00 in Green Impact Partners on September 3, 2024 and sell it today you would earn a total of 19.00 from holding Green Impact Partners or generate 9.05% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Weak |
| Accuracy | 99.21% |
| Values | Daily Returns |
Green Impact Partners vs. Algonquin Power Utilities
Performance |
| Timeline |
| Green Impact Partners |
| Algonquin Power Utilities |
Green Impact and Algonquin Power Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Green Impact and Algonquin Power
The main advantage of trading using opposite Green Impact and Algonquin Power positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Green Impact 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.| Green Impact vs. Alternus Energy Group | Green Impact vs. First National Energy | Green Impact vs. Tokyo Electric Power | Green Impact vs. Clearway Energy Class |
| Algonquin Power vs. Brookfield Renewable Corp | Algonquin Power vs. Nextera Energy Partners | Algonquin Power vs. Clearway Energy Class | Algonquin Power vs. Atlantica Sustainable Infrastructure |
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 Sectors module to list of equity sectors categorizing publicly traded companies based on their primary business activities.
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