Correlation Between TransAlta Corp and Agricultural Bank
Can any of the company-specific risk be diversified away by investing in both TransAlta Corp and Agricultural Bank 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 TransAlta Corp and Agricultural Bank into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between TransAlta Corp and Agricultural Bank, you can compare the effects of market volatilities on TransAlta Corp and Agricultural Bank 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 TransAlta Corp with a short position of Agricultural Bank. Check out your portfolio center. Please also check ongoing floating volatility patterns of TransAlta Corp and Agricultural Bank.
Diversification Opportunities for TransAlta Corp and Agricultural Bank
0.57 | Correlation Coefficient |
Very weak diversification
The 3 months correlation between TransAlta and Agricultural is 0.57. Overlapping area represents the amount of risk that can be diversified away by holding TransAlta Corp and Agricultural Bank in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Agricultural Bank and TransAlta Corp 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 TransAlta Corp are associated (or correlated) with Agricultural Bank. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Agricultural Bank has no effect on the direction of TransAlta Corp i.e., TransAlta Corp and Agricultural Bank go up and down completely randomly.
Pair Corralation between TransAlta Corp and Agricultural Bank
Considering the 90-day investment horizon TransAlta Corp is expected to generate 1.45 times more return on investment than Agricultural Bank. However, TransAlta Corp is 1.45 times more volatile than Agricultural Bank. It trades about 0.16 of its potential returns per unit of risk. Agricultural Bank is currently generating about -0.35 per unit of risk. If you would invest 1,009 in TransAlta Corp on August 30, 2024 and sell it today you would earn a total of 100.00 from holding TransAlta Corp or generate 9.91% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Weak |
| Accuracy | 95.65% |
| Values | Daily Returns |
TransAlta Corp vs. Agricultural Bank
Performance |
| Timeline |
| TransAlta Corp |
| Agricultural Bank |
TransAlta Corp and Agricultural Bank Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with TransAlta Corp and Agricultural Bank
The main advantage of trading using opposite TransAlta Corp and Agricultural Bank positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if TransAlta Corp position performs unexpectedly, Agricultural Bank 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 Agricultural Bank will offset losses from the drop in Agricultural Bank's long position.| TransAlta Corp vs. Pampa Energia SA | TransAlta Corp vs. Vistra Energy Corp | TransAlta Corp vs. NRG Energy | TransAlta Corp vs. Power Assets Holdings |
| Agricultural Bank vs. China Construction Bank | Agricultural Bank vs. National Australia Bank | Agricultural Bank vs. Svenska Handelsbanken AB | Agricultural Bank vs. Bank of America |
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 Price Ceiling Movement module to calculate and plot Price Ceiling Movement for different equity instruments.
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