Correlation Between Algonquin Power and Condor Energies

Can any of the company-specific risk be diversified away by investing in both Algonquin Power and Condor Energies 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 Condor Energies 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 Condor Energies, you can compare the effects of market volatilities on Algonquin Power and Condor Energies 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 Condor Energies. Check out your portfolio center. Please also check ongoing floating volatility patterns of Algonquin Power and Condor Energies.

Diversification Opportunities for Algonquin Power and Condor Energies

-0.81

Correlation Coefficient

Algonquin Power  Condor Energies

Pay attention - limited upside

The 3 months correlation between Algonquin and Condor is -0.81. Overlapping area represents the amount of risk that can be diversified away by holding Algonquin Power Utilities and Condor Energies in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Condor Energies 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 Condor Energies. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Condor Energies has no effect on the direction of Algonquin Power i.e., Algonquin Power and Condor Energies go up and down completely randomly.

Pair Corralation between Algonquin Power and Condor Energies

Assuming the 90 days trading horizon Algonquin Power Utilities is expected to generate 0.22 times more return on investment than Condor Energies. However, Algonquin Power Utilities is 4.51 times less risky than Condor Energies. It trades about 0.1 of its potential returns per unit of risk. Condor Energies is currently generating about -0.14 per unit of risk. If you would invest  2,349  in Algonquin Power Utilities on October 25, 2024 and sell it today you would earn a total of  91.00  from holding Algonquin Power Utilities or generate 3.87% return on investment over 90 days.

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

Algonquin Power Utilities  vs.  Condor Energies

Algonquin Power Utilities

Risk-Adjusted Performance

7 of 100

OK

Compared to the overall equity markets, risk-adjusted returns on investments in Algonquin Power Utilities are ranked lower than 7 (%) 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 recent stock price disturbance, may contribute to short-term losses for the investors.

Condor Energies

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Condor Energies 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 Condor Energies

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

The idea behind Algonquin Power Utilities and Condor Energies 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 Volatility Analysis module to get historical volatility and risk analysis based on latest market data.