Correlation Between ALERION CLEANPOWER and Loews Corp

Can any of the company-specific risk be diversified away by investing in both ALERION CLEANPOWER and Loews Corp 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 ALERION CLEANPOWER and Loews Corp into the same portfolio, which is an essential part of the fundamental portfolio management process.

By analyzing existing cross correlation between ALERION CLEANPOWER and Loews Corp, you can compare the effects of market volatilities on ALERION CLEANPOWER and Loews Corp 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 ALERION CLEANPOWER with a short position of Loews Corp. Check out your portfolio center. Please also check ongoing floating volatility patterns of ALERION CLEANPOWER and Loews Corp.

Diversification Opportunities for ALERION CLEANPOWER and Loews Corp

0.4

Correlation Coefficient

ALERION CLEANPOWER  Loews Corp

Very weak diversification

The 3 months correlation between ALERION and Loews is 0.4. Overlapping area represents the amount of risk that can be diversified away by holding ALERION CLEANPOWER and Loews Corp in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Loews Corp and ALERION CLEANPOWER 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 ALERION CLEANPOWER are associated (or correlated) with Loews Corp. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Loews Corp has no effect on the direction of ALERION CLEANPOWER i.e., ALERION CLEANPOWER and Loews Corp go up and down completely randomly.

Pair Corralation between ALERION CLEANPOWER and Loews Corp

Assuming the 90 days trading horizon ALERION CLEANPOWER is expected to under-perform the Loews Corp. In addition to that, ALERION CLEANPOWER is 1.82 times more volatile than Loews Corp. It trades about -0.05 of its total potential returns per unit of risk. Loews Corp is currently generating about 0.07 per unit of volatility. If you would invest  5,507  in Loews Corp on October 27, 2024 and sell it today you would earn a total of  2,543  from holding Loews Corp or generate 46.18% return on investment over 90 days.

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

ALERION CLEANPOWER  vs.  Loews Corp

ALERION CLEANPOWER

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days ALERION CLEANPOWER has generated negative risk-adjusted returns adding no value to investors with long positions. Despite nearly stable basic indicators, ALERION CLEANPOWER is not utilizing all of its potentials. The current stock price disturbance, may contribute to mid-run losses for the stockholders.

Loews Corp

Risk-Adjusted Performance

7 of 100

OK

Compared to the overall equity markets, risk-adjusted returns on investments in Loews Corp are ranked lower than 7 (%) of all global equities and portfolios over the last 90 days. Despite nearly fragile basic indicators, Loews Corp may actually be approaching a critical reversion point that can send shares even higher in February 2025.

Pair Trading with ALERION CLEANPOWER and Loews Corp

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

The idea behind ALERION CLEANPOWER and Loews Corp 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 Bond Analysis module to evaluate and analyze corporate bonds as a potential investment for your portfolios..