Correlation Between Solution Financial and Algonquin Power
Can any of the company-specific risk be diversified away by investing in both Solution Financial 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 Solution Financial and Algonquin Power into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Solution Financial and Algonquin Power Utilities, you can compare the effects of market volatilities on Solution Financial 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 Solution Financial with a short position of Algonquin Power. Check out your portfolio center. Please also check ongoing floating volatility patterns of Solution Financial and Algonquin Power.
Diversification Opportunities for Solution Financial and Algonquin Power
0.12 | Correlation Coefficient |
Average diversification
The 3 months correlation between Solution and Algonquin is 0.12. Overlapping area represents the amount of risk that can be diversified away by holding Solution Financial 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 Solution Financial 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 Solution Financial 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 Solution Financial i.e., Solution Financial and Algonquin Power go up and down completely randomly.
Pair Corralation between Solution Financial and Algonquin Power
Assuming the 90 days trading horizon Solution Financial is expected to generate 1.18 times less return on investment than Algonquin Power. In addition to that, Solution Financial is 3.0 times more volatile than Algonquin Power Utilities. It trades about 0.1 of its total potential returns per unit of risk. Algonquin Power Utilities is currently generating about 0.35 per unit of volatility. If you would invest 2,319 in Algonquin Power Utilities on September 21, 2024 and sell it today you would earn a total of 106.00 from holding Algonquin Power Utilities or generate 4.57% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Insignificant |
| Accuracy | 100.0% |
| Values | Daily Returns |
Solution Financial vs. Algonquin Power Utilities
Performance |
| Timeline |
| Solution Financial |
| Algonquin Power Utilities |
Solution Financial and Algonquin Power Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Solution Financial and Algonquin Power
The main advantage of trading using opposite Solution Financial and Algonquin Power positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Solution Financial 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.| Solution Financial vs. Algonquin Power Utilities | Solution Financial vs. Ramp Metals | Solution Financial vs. Quorum Information Technologies | Solution Financial vs. Dream Industrial Real |
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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 Companies Directory module to evaluate performance of over 100,000 Stocks, Funds, and ETFs against different fundamentals.
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