Correlation Between Sysco Corp and Algonquin Power

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

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

Diversification Opportunities for Sysco Corp and Algonquin Power

-0.15

Correlation Coefficient

Sysco Corp  Algonquin Power

Good diversification

The 3 months correlation between Sysco and Algonquin is -0.15. Overlapping area represents the amount of risk that can be diversified away by holding Sysco Corp 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 Sysco Corp 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 Sysco Corp 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 Sysco Corp i.e., Sysco Corp and Algonquin Power go up and down completely randomly.

Pair Corralation between Sysco Corp and Algonquin Power

Assuming the 90 days trading horizon Sysco Corp is expected to under-perform the Algonquin Power. But the stock apears to be less risky and, when comparing its historical volatility, Sysco Corp is 1.88 times less risky than Algonquin Power. The stock trades about -0.19 of its potential returns per unit of risk. The Algonquin Power Utilities is currently generating about -0.02 of returns per unit of risk over similar time horizon. If you would invest  420.00  in Algonquin Power Utilities on October 27, 2024 and sell it today you would lose (3.00) from holding Algonquin Power Utilities or give up 0.71% of portfolio value over 90 days.

Time Period	3 Months [change]
Direction	Moves Against
Strength	Insignificant
Accuracy	95.0%
Values	Daily Returns

Sysco Corp  vs.  Algonquin Power Utilities

Sysco Corp

Risk-Adjusted Performance

4 of 100

Insignificant

Compared to the overall equity markets, risk-adjusted returns on investments in Sysco Corp are ranked lower than 4 (%) of all global equities and portfolios over the last 90 days. In spite of rather sound basic indicators, Sysco Corp is not utilizing all of its potentials. The current stock price tumult, may contribute to shorter-term losses for the shareholders.

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. Despite latest fragile performance, the Stock's basic indicators remain stable and the current disturbance on Wall Street may also be a sign of long-run gains for the company stockholders.

Pair Trading with Sysco Corp and Algonquin Power

The main advantage of trading using opposite Sysco Corp and Algonquin Power positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Sysco Corp 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 Sysco Corp 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.

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 Odds Of Bankruptcy module to get analysis of equity chance of financial distress in the next 2 years.