Correlation Between Algonquin Power and Fiera Capital

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

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

Diversification Opportunities for Algonquin Power and Fiera Capital

0.45

Correlation Coefficient

Algonquin Power  Fiera Capital

Very weak diversification

The 3 months correlation between Algonquin and Fiera is 0.45. Overlapping area represents the amount of risk that can be diversified away by holding Algonquin Power Utilities and Fiera Capital Global in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Fiera Capital Global and Algonquin 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 Algonquin Power Utilities are associated (or correlated) with Fiera Capital. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Fiera Capital Global has no effect on the direction of Algonquin Power i.e., Algonquin Power and Fiera Capital go up and down completely randomly.

Pair Corralation between Algonquin Power and Fiera Capital

Assuming the 90 days trading horizon Algonquin Power Utilities is expected to generate 3.06 times more return on investment than Fiera Capital. However, Algonquin Power is 3.06 times more volatile than Fiera Capital Global. It trades about 0.09 of its potential returns per unit of risk. Fiera Capital Global is currently generating about -0.37 per unit of risk. If you would invest  805.00  in Algonquin Power Utilities on January 24, 2024 and sell it today you would earn a total of  26.00  from holding Algonquin Power Utilities or generate 3.23% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Together
Strength	Weak
Accuracy	100.0%
Values	Daily Returns

Algonquin Power Utilities  vs.  Fiera Capital Global

Algonquin Power Utilities

Risk-Adjusted Performance

5 of 100

Modest

Compared to the overall equity markets, risk-adjusted returns on investments in Algonquin Power Utilities are ranked lower than 5 (%) of all global equities and portfolios over the last 90 days. In spite of very weak basic indicators, Algonquin Power may actually be approaching a critical reversion point that can send shares even higher in May 2024.

Fiera Capital Global

Risk-Adjusted Performance

3 of 100

Insignificant

Compared to the overall equity markets, risk-adjusted returns on investments in Fiera Capital Global are ranked lower than 3 (%) of all funds and portfolios of funds over the last 90 days. In spite of fairly strong technical and fundamental indicators, Fiera Capital is not utilizing all of its potentials. The current stock price disturbance, may contribute to short-term losses for the investors.

Pair Trading with Algonquin Power and Fiera Capital

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

The idea behind Algonquin Power Utilities and Fiera Capital Global 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 Money Managers module to screen money managers from public funds and ETFs managed around the world.