Correlation Between Atlantica Sustainable and First National

Can any of the company-specific risk be diversified away by investing in both Atlantica Sustainable and First National 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 Atlantica Sustainable and First National into the same portfolio, which is an essential part of the fundamental portfolio management process.

By analyzing existing cross correlation between Atlantica Sustainable Infrastructure and First National Energy, you can compare the effects of market volatilities on Atlantica Sustainable and First National 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 Atlantica Sustainable with a short position of First National. Check out your portfolio center. Please also check ongoing floating volatility patterns of Atlantica Sustainable and First National.

Diversification Opportunities for Atlantica Sustainable and First National

-0.69

Correlation Coefficient

Atlantica Sustainable  First National

Excellent diversification

The 3 months correlation between Atlantica and First is -0.69. Overlapping area represents the amount of risk that can be diversified away by holding Atlantica Sustainable Infrastr and First National Energy in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on First National Energy and Atlantica Sustainable 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 Atlantica Sustainable Infrastructure are associated (or correlated) with First National. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of First National Energy has no effect on the direction of Atlantica Sustainable i.e., Atlantica Sustainable and First National go up and down completely randomly.

Pair Corralation between Atlantica Sustainable and First National

Allowing for the 90-day total investment horizon Atlantica Sustainable is expected to generate 14265.17 times less return on investment than First National. But when comparing it to its historical volatility, Atlantica Sustainable Infrastructure is 54.7 times less risky than First National. It trades about 0.0 of its potential returns per unit of risk. First National Energy is currently generating about 0.09 of returns per unit of risk over similar time horizon. If you would invest  55.00  in First National Energy on September 4, 2024 and sell it today you would lose (45.94) from holding First National Energy or give up 83.53% of portfolio value over 90 days.

Time Period	3 Months [change]
Direction	Moves Against
Strength	Weak
Accuracy	99.8%
Values	Daily Returns

Atlantica Sustainable Infrastr  vs.  First National Energy

Atlantica Sustainable

Risk-Adjusted Performance

16 of 100

Solid

Compared to the overall equity markets, risk-adjusted returns on investments in Atlantica Sustainable Infrastructure are ranked lower than 16 (%) of all global equities and portfolios over the last 90 days. In spite of fairly strong basic indicators, Atlantica Sustainable is not utilizing all of its potentials. The current stock price disturbance, may contribute to short-term losses for the investors.

First National Energy

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days First National Energy has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of rather sound technical and fundamental indicators, First National is not utilizing all of its potentials. The latest stock price tumult, may contribute to shorter-term losses for the shareholders.

Pair Trading with Atlantica Sustainable and First National

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

The idea behind Atlantica Sustainable Infrastructure and First National Energy 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 Portfolio Diagnostics module to use generated alerts and portfolio events aggregator to diagnose current holdings.