Correlation Between Atlantica Sustainable and Dominion Energy
Can any of the company-specific risk be diversified away by investing in both Atlantica Sustainable and Dominion Energy 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 Dominion Energy 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 Dominion Energy, you can compare the effects of market volatilities on Atlantica Sustainable and Dominion Energy 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 Dominion Energy. Check out your portfolio center. Please also check ongoing floating volatility patterns of Atlantica Sustainable and Dominion Energy.
Diversification Opportunities for Atlantica Sustainable and Dominion Energy
-0.22 | Correlation Coefficient |
Very good diversification
The 3 months correlation between Atlantica and Dominion is -0.22. Overlapping area represents the amount of risk that can be diversified away by holding Atlantica Sustainable Infrastr and Dominion Energy in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Dominion 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 Dominion Energy. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Dominion Energy has no effect on the direction of Atlantica Sustainable i.e., Atlantica Sustainable and Dominion Energy go up and down completely randomly.
Pair Corralation between Atlantica Sustainable and Dominion Energy
Allowing for the 90-day total investment horizon Atlantica Sustainable Infrastructure is expected to under-perform the Dominion Energy. In addition to that, Atlantica Sustainable is 1.16 times more volatile than Dominion Energy. It trades about -0.07 of its total potential returns per unit of risk. Dominion Energy is currently generating about -0.02 per unit of volatility. If you would invest 5,443 in Dominion Energy on January 17, 2024 and sell it today you would lose (651.00) from holding Dominion Energy or give up 11.96% of portfolio value over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Insignificant |
| Accuracy | 100.0% |
| Values | Daily Returns |
Atlantica Sustainable Infrastr vs. Dominion Energy
Performance |
| Timeline |
| Atlantica Sustainable |
| Dominion Energy |
Atlantica Sustainable and Dominion Energy Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Atlantica Sustainable and Dominion Energy
The main advantage of trading using opposite Atlantica Sustainable and Dominion Energy positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Atlantica Sustainable position performs unexpectedly, Dominion Energy 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 Dominion Energy will offset losses from the drop in Dominion Energy's long position.| Atlantica Sustainable vs. Algonquin Power Utilities | Atlantica Sustainable vs. Orsted AS ADR | Atlantica Sustainable vs. Algonquin Power Utilities |
| Dominion Energy vs. Alliant Energy Corp | Dominion Energy vs. Pinnacle West Capital | Dominion Energy vs. FirstEnergy | Dominion Energy vs. Edison International |
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 Portfolio Manager module to state of the art Portfolio Manager to monitor and improve performance of your invested capital.
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