Correlation Between Information Services and Algonquin Power
Can any of the company-specific risk be diversified away by investing in both Information Services 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 Information Services and Algonquin Power into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Information Services and Algonquin Power Utilities, you can compare the effects of market volatilities on Information Services 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 Information Services with a short position of Algonquin Power. Check out your portfolio center. Please also check ongoing floating volatility patterns of Information Services and Algonquin Power.
Diversification Opportunities for Information Services and Algonquin Power
-0.57 | Correlation Coefficient |
Excellent diversification
The 3 months correlation between Information and Algonquin is -0.57. Overlapping area represents the amount of risk that can be diversified away by holding Information Services 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 Information Services 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 Information Services 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 Information Services i.e., Information Services and Algonquin Power go up and down completely randomly.
Pair Corralation between Information Services and Algonquin Power
Assuming the 90 days trading horizon Information Services is expected to generate 1.66 times more return on investment than Algonquin Power. However, Information Services is 1.66 times more volatile than Algonquin Power Utilities. It trades about 0.12 of its potential returns per unit of risk. Algonquin Power Utilities is currently generating about -0.03 per unit of risk. If you would invest 2,701 in Information Services on October 14, 2024 and sell it today you would earn a total of 69.00 from holding Information Services or generate 2.55% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Very Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
Information Services vs. Algonquin Power Utilities
Performance |
| Timeline |
| Information Services |
| Algonquin Power Utilities |
Information Services and Algonquin Power Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Information Services and Algonquin Power
The main advantage of trading using opposite Information Services and Algonquin Power positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Information Services 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.| Information Services vs. Costco Wholesale Corp | Information Services vs. Mako Mining Corp | Information Services vs. Verizon Communications CDR | Information Services vs. Cogeco Communications |
| Algonquin Power vs. VIP Entertainment Technologies | Algonquin Power vs. Gfl Environmental Holdings | Algonquin Power vs. Thunderbird Entertainment Group | Algonquin Power vs. Sun Peak Metals |
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 Sign In To Macroaxis module to sign in to explore Macroaxis' wealth optimization platform and fintech modules.
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