Correlation Between Algonquin Power and Clearway Energy

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

Diversification Opportunities for Algonquin Power and Clearway Energy

0.0

Correlation Coefficient

Algonquin Power  Clearway Energy

Pay attention - limited upside

The 3 months correlation between Algonquin and Clearway is 0.0. Overlapping area represents the amount of risk that can be diversified away by holding Algonquin Power Utilities and Clearway Energy Class in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Clearway Energy Class 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 Clearway Energy. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Clearway Energy Class has no effect on the direction of Algonquin Power i.e., Algonquin Power and Clearway Energy go up and down completely randomly.

Pair Corralation between Algonquin Power and Clearway Energy

If you would invest  2,575  in Clearway Energy Class on December 30, 2024 and sell it today you would earn a total of  442.00  from holding Clearway Energy Class or generate 17.17% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Flat
Strength	Insignificant
Accuracy	0.0%
Values	Daily Returns

Algonquin Power Utilities  vs.  Clearway Energy Class

Algonquin Power Utilities

Risk-Adjusted Performance

Very Weak

Over the last 90 days Algonquin Power Utilities has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of comparatively stable basic indicators, Algonquin Power is not utilizing all of its potentials. The current stock price uproar, may contribute to short-horizon losses for the private investors.

Clearway Energy Class

Risk-Adjusted Performance

Good

Compared to the overall equity markets, risk-adjusted returns on investments in Clearway Energy Class are ranked lower than 13 (%) of all global equities and portfolios over the last 90 days. In spite of very unsteady technical and fundamental indicators, Clearway Energy displayed solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with Algonquin Power and Clearway Energy

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

The idea behind Algonquin Power Utilities and Clearway Energy Class 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 Earnings Calls module to check upcoming earnings announcements updated hourly across public exchanges.