Correlation Between Altus Power and ODP Corp
Can any of the company-specific risk be diversified away by investing in both Altus Power and ODP 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 Altus Power and ODP Corp into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Altus Power and ODP Corp, you can compare the effects of market volatilities on Altus Power and ODP 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 Altus Power with a short position of ODP Corp. Check out your portfolio center. Please also check ongoing floating volatility patterns of Altus Power and ODP Corp.
Diversification Opportunities for Altus Power and ODP Corp
0.71 | Correlation Coefficient |
Poor diversification
The 3 months correlation between Altus and ODP is 0.71. Overlapping area represents the amount of risk that can be diversified away by holding Altus Power and ODP Corp in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on ODP Corp and Altus Power 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 Altus Power are associated (or correlated) with ODP Corp. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of ODP Corp has no effect on the direction of Altus Power i.e., Altus Power and ODP Corp go up and down completely randomly.
Pair Corralation between Altus Power and ODP Corp
Given the investment horizon of 90 days Altus Power is expected to under-perform the ODP Corp. In addition to that, Altus Power is 3.14 times more volatile than ODP Corp. It trades about -0.11 of its total potential returns per unit of risk. ODP Corp is currently generating about -0.02 per unit of volatility. If you would invest 5,125 in ODP Corp on January 24, 2024 and sell it today you would lose (136.00) from holding ODP Corp or give up 2.65% of portfolio value over 90 days.
Time Period | 3 Months [change] |
Direction | Moves Together |
Strength | Significant |
Accuracy | 100.0% |
Values | Daily Returns |
Altus Power vs. ODP Corp
Performance |
Timeline |
Altus Power |
ODP Corp |
Altus Power and ODP Corp Volatility Contrast
Predicted Return Density |
Returns |
Pair Trading with Altus Power and ODP Corp
The main advantage of trading using opposite Altus Power and ODP Corp positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Altus Power position performs unexpectedly, ODP 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 ODP Corp will offset losses from the drop in ODP Corp's long position.Altus Power vs. Ormat Technologies | Altus Power vs. Enlight Renewable Energy | Altus Power vs. Fluence Energy | Altus Power vs. Renew Energy Global |
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 Bollinger Bands module to use Bollinger Bands indicator to analyze target price for a given investing horizon.
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