Correlation Between TransAlta Corp and AGL Energy
Can any of the company-specific risk be diversified away by investing in both TransAlta Corp and AGL Energy 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 AGL Energy into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between TransAlta Corp and AGL Energy, you can compare the effects of market volatilities on TransAlta Corp and AGL Energy 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 AGL Energy. Check out your portfolio center. Please also check ongoing floating volatility patterns of TransAlta Corp and AGL Energy.
Diversification Opportunities for TransAlta Corp and AGL Energy
0.13 | Correlation Coefficient |
Average diversification
The 3 months correlation between TransAlta and AGL is 0.13. Overlapping area represents the amount of risk that can be diversified away by holding TransAlta Corp and AGL Energy in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on AGL Energy 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 AGL Energy. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of AGL Energy has no effect on the direction of TransAlta Corp i.e., TransAlta Corp and AGL Energy go up and down completely randomly.
Pair Corralation between TransAlta Corp and AGL Energy
Considering the 90-day investment horizon TransAlta Corp is expected to generate 0.7 times more return on investment than AGL Energy. However, TransAlta Corp is 1.42 times less risky than AGL Energy. It trades about 0.18 of its potential returns per unit of risk. AGL Energy is currently generating about 0.03 per unit of risk. If you would invest 703.00 in TransAlta Corp on August 24, 2024 and sell it today you would earn a total of 389.00 from holding TransAlta Corp or generate 55.33% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Insignificant |
| Accuracy | 100.0% |
| Values | Daily Returns |
TransAlta Corp vs. AGL Energy
Performance |
| Timeline |
| TransAlta Corp |
| AGL Energy |
TransAlta Corp and AGL Energy Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with TransAlta Corp and AGL Energy
The main advantage of trading using opposite TransAlta Corp and AGL Energy positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if TransAlta Corp position performs unexpectedly, AGL Energy 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 AGL Energy will offset losses from the drop in AGL Energy'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 |
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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 Equity Forecasting module to use basic forecasting models to generate price predictions and determine price momentum.
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