Correlation Between Ameresco and AgrifyCorp

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

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

Diversification Opportunities for Ameresco and AgrifyCorp

0.2

Correlation Coefficient

Ameresco  AgrifyCorp

Modest diversification

The 3 months correlation between Ameresco and AgrifyCorp is 0.2. Overlapping area represents the amount of risk that can be diversified away by holding Ameresco and AgrifyCorp in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on AgrifyCorp and Ameresco 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 Ameresco are associated (or correlated) with AgrifyCorp. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of AgrifyCorp has no effect on the direction of Ameresco i.e., Ameresco and AgrifyCorp go up and down completely randomly.

Pair Corralation between Ameresco and AgrifyCorp

Given the investment horizon of 90 days Ameresco is expected to generate 0.51 times more return on investment than AgrifyCorp. However, Ameresco is 1.95 times less risky than AgrifyCorp. It trades about -0.01 of its potential returns per unit of risk. AgrifyCorp is currently generating about -0.16 per unit of risk. If you would invest  1,968  in Ameresco on January 24, 2024 and sell it today you would lose (59.00) from holding Ameresco or give up 3.0% of portfolio value over 90 days.

Time Period	3 Months [change]
Direction	Moves Together
Strength	Very Weak
Accuracy	95.24%
Values	Daily Returns

Ameresco  vs.  AgrifyCorp

Ameresco

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Ameresco has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of latest unsteady performance, the Stock's basic indicators remain sound and the latest tumult on Wall Street may also be a sign of longer-term gains for the firm shareholders.

AgrifyCorp

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days AgrifyCorp has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of fragile performance in the last few months, the Stock's technical and fundamental indicators remain fairly strong which may send shares a bit higher in May 2024. The current disturbance may also be a sign of long term up-swing for the company investors.

Pair Trading with Ameresco and AgrifyCorp

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

The idea behind Ameresco and AgrifyCorp 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 Investing Opportunities module to build portfolios using our predefined set of ideas and optimize them against your investing preferences.