Correlation Between Bloom Energy and Algonquin Power
Can any of the company-specific risk be diversified away by investing in both Bloom Energy 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 Bloom Energy and Algonquin Power into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Bloom Energy Corp and Algonquin Power Utilities, you can compare the effects of market volatilities on Bloom Energy 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 Bloom Energy with a short position of Algonquin Power. Check out your portfolio center. Please also check ongoing floating volatility patterns of Bloom Energy and Algonquin Power.
Diversification Opportunities for Bloom Energy and Algonquin Power
0.28 | Correlation Coefficient |
Modest diversification
The 3 months correlation between Bloom and Algonquin is 0.28. Overlapping area represents the amount of risk that can be diversified away by holding Bloom Energy 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 Bloom Energy 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 Bloom Energy 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 Bloom Energy i.e., Bloom Energy and Algonquin Power go up and down completely randomly.
Pair Corralation between Bloom Energy and Algonquin Power
Allowing for the 90-day total investment horizon Bloom Energy Corp is expected to under-perform the Algonquin Power. In addition to that, Bloom Energy is 2.24 times more volatile than Algonquin Power Utilities. It trades about -0.07 of its total potential returns per unit of risk. Algonquin Power Utilities is currently generating about 0.05 per unit of volatility. If you would invest 591.00 in Algonquin Power Utilities on January 26, 2024 and sell it today you would earn a total of 28.00 from holding Algonquin Power Utilities or generate 4.74% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Very Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
Bloom Energy Corp vs. Algonquin Power Utilities
Performance |
| Timeline |
| Bloom Energy Corp |
| Algonquin Power Utilities |
Bloom Energy and Algonquin Power Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Bloom Energy and Algonquin Power
The main advantage of trading using opposite Bloom Energy and Algonquin Power positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Bloom Energy 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 Bloom Energy 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.| Algonquin Power vs. Energy Vault Holdings | Algonquin Power vs. Fluence Energy | Algonquin Power vs. Altus Power | Algonquin Power vs. Excelerate Energy |
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 FinTech Suite module to use AI to screen and filter profitable investment opportunities.
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