Correlation Between Major Drilling and Algonquin Power
Can any of the company-specific risk be diversified away by investing in both Major Drilling 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 Major Drilling and Algonquin Power into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Major Drilling Group and Algonquin Power Utilities, you can compare the effects of market volatilities on Major Drilling 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 Major Drilling with a short position of Algonquin Power. Check out your portfolio center. Please also check ongoing floating volatility patterns of Major Drilling and Algonquin Power.
Diversification Opportunities for Major Drilling and Algonquin Power
-0.32 | Correlation Coefficient |
Very good diversification
The 3 months correlation between Major and Algonquin is -0.32. Overlapping area represents the amount of risk that can be diversified away by holding Major Drilling Group 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 Major Drilling 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 Major Drilling Group 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 Major Drilling i.e., Major Drilling and Algonquin Power go up and down completely randomly.
Pair Corralation between Major Drilling and Algonquin Power
Assuming the 90 days trading horizon Major Drilling Group is expected to under-perform the Algonquin Power. In addition to that, Major Drilling is 4.01 times more volatile than Algonquin Power Utilities. It trades about -0.02 of its total potential returns per unit of risk. Algonquin Power Utilities is currently generating about 0.01 per unit of volatility. If you would invest 2,338 in Algonquin Power Utilities on September 4, 2024 and sell it today you would earn a total of 8.00 from holding Algonquin Power Utilities or generate 0.34% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Insignificant |
| Accuracy | 100.0% |
| Values | Daily Returns |
Major Drilling Group vs. Algonquin Power Utilities
Performance |
| Timeline |
| Major Drilling Group |
| Algonquin Power Utilities |
Major Drilling and Algonquin Power Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Major Drilling and Algonquin Power
The main advantage of trading using opposite Major Drilling and Algonquin Power positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Major Drilling 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.| Major Drilling vs. Pason Systems | Major Drilling vs. HudBay Minerals | Major Drilling vs. Ensign Energy Services | Major Drilling vs. Precision Drilling |
| Algonquin Power vs. Pembina Pipeline Corp | Algonquin Power vs. Major Drilling Group | Algonquin Power vs. Tree Island Steel | Algonquin Power vs. Falcon Energy Materials |
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 Money Managers module to screen money managers from public funds and ETFs managed around the world.
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