Correlation Between RioCan Real and Algonquin Power
Can any of the company-specific risk be diversified away by investing in both RioCan Real 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 RioCan Real and Algonquin Power into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between RioCan Real Estate and Algonquin Power Utilities, you can compare the effects of market volatilities on RioCan Real 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 RioCan Real with a short position of Algonquin Power. Check out your portfolio center. Please also check ongoing floating volatility patterns of RioCan Real and Algonquin Power.
Diversification Opportunities for RioCan Real and Algonquin Power
0.8 | Correlation Coefficient |
Very poor diversification
The 3 months correlation between RioCan and Algonquin is 0.8. Overlapping area represents the amount of risk that can be diversified away by holding RioCan Real Estate 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 RioCan Real 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 RioCan Real Estate 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 RioCan Real i.e., RioCan Real and Algonquin Power go up and down completely randomly.
Pair Corralation between RioCan Real and Algonquin Power
Assuming the 90 days trading horizon RioCan Real Estate is expected to generate 0.68 times more return on investment than Algonquin Power. However, RioCan Real Estate is 1.47 times less risky than Algonquin Power. It trades about 0.04 of its potential returns per unit of risk. Algonquin Power Utilities is currently generating about 0.0 per unit of risk. If you would invest 1,684 in RioCan Real Estate on September 1, 2024 and sell it today you would earn a total of 217.00 from holding RioCan Real Estate or generate 12.89% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Strong |
| Accuracy | 100.0% |
| Values | Daily Returns |
RioCan Real Estate vs. Algonquin Power Utilities
Performance |
| Timeline |
| RioCan Real Estate |
| Algonquin Power Utilities |
RioCan Real and Algonquin Power Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with RioCan Real and Algonquin Power
The main advantage of trading using opposite RioCan Real and Algonquin Power positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if RioCan Real 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.| RioCan Real vs. SmartCentres Real Estate | RioCan Real vs. HR Real Estate | RioCan Real vs. Fortis Inc | RioCan Real vs. Enbridge |
| Algonquin Power vs. Fortis Inc | Algonquin Power vs. Enbridge | Algonquin Power vs. Telus Corp | Algonquin Power vs. Brookfield Renewable Partners |
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 Competition Analyzer module to analyze and compare many basic indicators for a group of related or unrelated entities.
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