Correlation Between Algonquin Power and A W

Can any of the company-specific risk be diversified away by investing in both Algonquin Power and A W 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 Algonquin Power and A W into the same portfolio, which is an essential part of the fundamental portfolio management process.

By analyzing existing cross correlation between Algonquin Power Utilities and A W FOOD, you can compare the effects of market volatilities on Algonquin Power and A W 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 Algonquin Power with a short position of A W. Check out your portfolio center. Please also check ongoing floating volatility patterns of Algonquin Power and A W.

Diversification Opportunities for Algonquin Power and A W

-0.47

Correlation Coefficient

Algonquin Power  A W

Very good diversification

The 3 months correlation between Algonquin and A W is -0.47. Overlapping area represents the amount of risk that can be diversified away by holding Algonquin Power Utilities and A W FOOD in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on A W FOOD and Algonquin Power 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 Algonquin Power Utilities are associated (or correlated) with A W. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of A W FOOD has no effect on the direction of Algonquin Power i.e., Algonquin Power and A W go up and down completely randomly.

Pair Corralation between Algonquin Power and A W

Assuming the 90 days trading horizon Algonquin Power Utilities is expected to generate 0.61 times more return on investment than A W. However, Algonquin Power Utilities is 1.64 times less risky than A W. It trades about 0.07 of its potential returns per unit of risk. A W FOOD is currently generating about -0.19 per unit of risk. If you would invest  1,831  in Algonquin Power Utilities on October 23, 2024 and sell it today you would earn a total of  627.00  from holding Algonquin Power Utilities or generate 34.24% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Against
Strength	Very Weak
Accuracy	13.53%
Values	Daily Returns

Algonquin Power Utilities  vs.  A W FOOD

Algonquin Power Utilities

Risk-Adjusted Performance

8 of 100

OK

Compared to the overall equity markets, risk-adjusted returns on investments in Algonquin Power Utilities are ranked lower than 8 (%) of all global equities and portfolios over the last 90 days. Despite somewhat strong basic indicators, Algonquin Power is not utilizing all of its potentials. The latest stock price disturbance, may contribute to short-term losses for the investors.

A W FOOD

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days A W FOOD has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of unfluctuating performance in the last few months, the Stock's basic indicators remain very healthy which may send shares a bit higher in February 2025. The recent disarray may also be a sign of long period up-swing for the firm investors.

Pair Trading with Algonquin Power and A W

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

The idea behind Algonquin Power Utilities and A W FOOD 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.

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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 Idea Optimizer module to use advanced portfolio builder with pre-computed micro ideas to build optimal portfolio .