Correlation Between Altagas Cum and CES Energy

Can any of the company-specific risk be diversified away by investing in both Altagas Cum and CES 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 Altagas Cum and CES Energy into the same portfolio, which is an essential part of the fundamental portfolio management process.

By analyzing existing cross correlation between Altagas Cum Red and CES Energy Solutions, you can compare the effects of market volatilities on Altagas Cum and CES 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 Altagas Cum with a short position of CES Energy. Check out your portfolio center. Please also check ongoing floating volatility patterns of Altagas Cum and CES Energy.

Diversification Opportunities for Altagas Cum and CES Energy

0.7

Correlation Coefficient

Altagas Cum  CES Energy

Poor diversification

The 3 months correlation between Altagas and CES is 0.7. Overlapping area represents the amount of risk that can be diversified away by holding Altagas Cum Red and CES Energy Solutions in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on CES Energy Solutions and Altagas Cum 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 Altagas Cum Red are associated (or correlated) with CES Energy. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of CES Energy Solutions has no effect on the direction of Altagas Cum i.e., Altagas Cum and CES Energy go up and down completely randomly.

Pair Corralation between Altagas Cum and CES Energy

Assuming the 90 days trading horizon Altagas Cum is expected to generate 3.19 times less return on investment than CES Energy. But when comparing it to its historical volatility, Altagas Cum Red is 3.46 times less risky than CES Energy. It trades about 0.1 of its potential returns per unit of risk. CES Energy Solutions is currently generating about 0.09 of returns per unit of risk over similar time horizon. If you would invest  767.00  in CES Energy Solutions on September 26, 2024 and sell it today you would earn a total of  207.00  from holding CES Energy Solutions or generate 26.99% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Together
Strength	Significant
Accuracy	100.0%
Values	Daily Returns

Altagas Cum Red  vs.  CES Energy Solutions

Altagas Cum Red

Risk-Adjusted Performance

11 of 100

Good

Compared to the overall equity markets, risk-adjusted returns on investments in Altagas Cum Red are ranked lower than 11 (%) of all global equities and portfolios over the last 90 days. Despite somewhat abnormal basic indicators, Altagas Cum may actually be approaching a critical reversion point that can send shares even higher in January 2025.

CES Energy Solutions

Risk-Adjusted Performance

17 of 100

Solid

Compared to the overall equity markets, risk-adjusted returns on investments in CES Energy Solutions are ranked lower than 17 (%) of all global equities and portfolios over the last 90 days. In spite of very unfluctuating basic indicators, CES Energy displayed solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with Altagas Cum and CES Energy

The main advantage of trading using opposite Altagas Cum and CES Energy positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Altagas Cum position performs unexpectedly, CES 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 CES Energy will offset losses from the drop in CES Energy's long position.

The idea behind Altagas Cum Red and CES Energy Solutions pairs trading is to make the combined position market-neutral, meaning the overall market's direction will not affect its win or loss (or potential downside or upside). This can be achieved by designing a pairs trade with two highly correlated stocks or equities that operate in a similar space or sector, making it possible to obtain profits through simple and relatively low-risk investment.

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 Portfolio Rebalancing module to analyze risk-adjusted returns against different time horizons to find asset-allocation targets.