Correlation Between Themac Resources and Algonquin Power

Can any of the company-specific risk be diversified away by investing in both Themac Resources and Algonquin Power 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 Themac Resources and Algonquin Power into the same portfolio, which is an essential part of the fundamental portfolio management process.

By analyzing existing cross correlation between Themac Resources Group and Algonquin Power Utilities, you can compare the effects of market volatilities on Themac Resources and Algonquin Power 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 Themac Resources with a short position of Algonquin Power. Check out your portfolio center. Please also check ongoing floating volatility patterns of Themac Resources and Algonquin Power.

Diversification Opportunities for Themac Resources and Algonquin Power

0.0

Correlation Coefficient

Themac Resources  Algonquin Power

Pay attention - limited upside

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

Pair Corralation between Themac Resources and Algonquin Power

Assuming the 90 days horizon Themac Resources Group is expected to generate 22.25 times more return on investment than Algonquin Power. However, Themac Resources is 22.25 times more volatile than Algonquin Power Utilities. It trades about 0.08 of its potential returns per unit of risk. Algonquin Power Utilities is currently generating about 0.05 per unit of risk. If you would invest  3.00  in Themac Resources Group on October 1, 2024 and sell it today you would earn a total of  0.50  from holding Themac Resources Group or generate 16.67% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Flat
Strength	Insignificant
Accuracy	98.39%
Values	Daily Returns

Themac Resources Group  vs.  Algonquin Power Utilities

Themac Resources

Risk-Adjusted Performance

6 of 100

Modest

Compared to the overall equity markets, risk-adjusted returns on investments in Themac Resources Group are ranked lower than 6 (%) of all global equities and portfolios over the last 90 days. In spite of fairly abnormal basic indicators, Themac Resources showed solid returns over the last few months and may actually be approaching a breakup point.

Algonquin Power Utilities

Risk-Adjusted Performance

4 of 100

Insignificant

Compared to the overall equity markets, risk-adjusted returns on investments in Algonquin Power Utilities are ranked lower than 4 (%) 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 latest stock price disturbance, may contribute to short-term losses for the investors.

Pair Trading with Themac Resources and Algonquin Power

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

The idea behind Themac Resources Group and Algonquin Power Utilities 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 Money Flow Index module to determine momentum by analyzing Money Flow Index and other technical indicators.