Correlation Between Algonquin Power and SiriusPoint

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

Diversification Opportunities for Algonquin Power and SiriusPoint

0.06

Correlation Coefficient

Algonquin Power  SiriusPoint

Significant diversification

The 3 months correlation between Algonquin and SiriusPoint is 0.06. Overlapping area represents the amount of risk that can be diversified away by holding Algonquin Power Utilities and SiriusPoint in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on SiriusPoint 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 SiriusPoint. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of SiriusPoint has no effect on the direction of Algonquin Power i.e., Algonquin Power and SiriusPoint go up and down completely randomly.

Pair Corralation between Algonquin Power and SiriusPoint

If you would invest  2,469  in SiriusPoint on September 2, 2024 and sell it today you would earn a total of  103.00  from holding SiriusPoint or generate 4.17% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Together
Strength	Insignificant
Accuracy	1.56%
Values	Daily Returns

Algonquin Power Utilities  vs.  SiriusPoint

Algonquin Power Utilities

Risk-Adjusted Performance

0 of 100

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.

SiriusPoint

Risk-Adjusted Performance

16 of 100

Solid

Compared to the overall equity markets, risk-adjusted returns on investments in SiriusPoint are ranked lower than 16 (%) of all global equities and portfolios over the last 90 days. Despite somewhat strong fundamental drivers, SiriusPoint is not utilizing all of its potentials. The current stock price disturbance, may contribute to short-term losses for the investors.

Pair Trading with Algonquin Power and SiriusPoint

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

The idea behind Algonquin Power Utilities and SiriusPoint 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 Correlation Analysis module to reduce portfolio risk simply by holding instruments which are not perfectly correlated.