Correlation Between Power Assets and Atco
Can any of the company-specific risk be diversified away by investing in both Power Assets and Atco 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 Power Assets and Atco into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Power Assets Holdings and Atco, you can compare the effects of market volatilities on Power Assets and Atco 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 Power Assets with a short position of Atco. Check out your portfolio center. Please also check ongoing floating volatility patterns of Power Assets and Atco.
Diversification Opportunities for Power Assets and Atco
-0.43 | Correlation Coefficient |
Very good diversification
The 3 months correlation between Power and Atco is -0.43. Overlapping area represents the amount of risk that can be diversified away by holding Power Assets Holdings and Atco in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Atco and Power Assets 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 Power Assets Holdings are associated (or correlated) with Atco. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Atco has no effect on the direction of Power Assets i.e., Power Assets and Atco go up and down completely randomly.
Pair Corralation between Power Assets and Atco
Assuming the 90 days horizon Power Assets Holdings is expected to generate 1.58 times more return on investment than Atco. However, Power Assets is 1.58 times more volatile than Atco. It trades about 0.09 of its potential returns per unit of risk. Atco is currently generating about 0.1 per unit of risk. If you would invest 649.00 in Power Assets Holdings on September 13, 2024 and sell it today you would earn a total of 19.00 from holding Power Assets Holdings or generate 2.93% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Very Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
Power Assets Holdings vs. Atco
Performance |
| Timeline |
| Power Assets Holdings |
| Atco |
Power Assets and Atco Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Power Assets and Atco
The main advantage of trading using opposite Power Assets and Atco positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Power Assets position performs unexpectedly, Atco 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 Atco will offset losses from the drop in Atco's long position.| Power Assets vs. TransAlta Corp | Power Assets vs. Pampa Energia SA | Power Assets vs. Vistra Energy Corp | Power Assets vs. NRG Energy |
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 Pair Correlation module to compare performance and examine fundamental relationship between any two equity instruments.
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