Correlation Between Algonquin Power and Montauk Renewables
Can any of the company-specific risk be diversified away by investing in both Algonquin Power and Montauk Renewables 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 Montauk Renewables 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 Montauk Renewables, you can compare the effects of market volatilities on Algonquin Power and Montauk Renewables 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 Montauk Renewables. Check out your portfolio center. Please also check ongoing floating volatility patterns of Algonquin Power and Montauk Renewables.
Diversification Opportunities for Algonquin Power and Montauk Renewables
0.19 | Correlation Coefficient |
Average diversification
The 3 months correlation between Algonquin and Montauk is 0.19. Overlapping area represents the amount of risk that can be diversified away by holding Algonquin Power Utilities and Montauk Renewables in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Montauk Renewables 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 Montauk Renewables. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Montauk Renewables has no effect on the direction of Algonquin Power i.e., Algonquin Power and Montauk Renewables go up and down completely randomly.
Pair Corralation between Algonquin Power and Montauk Renewables
If you would invest (100.00) in Algonquin Power Utilities on January 26, 2024 and sell it today you would earn a total of 100.00 from holding Algonquin Power Utilities or generate -100.0% return on investment over 90 days.
Time Period | 3 Months [change] |
Direction | Moves Together |
Strength | Insignificant |
Accuracy | 0.0% |
Values | Daily Returns |
Algonquin Power Utilities vs. Montauk Renewables
Performance |
Timeline |
Algonquin Power Utilities |
Risk-Adjusted Performance
0 of 100
Weak | Strong |
Very Weak
Montauk Renewables |
Algonquin Power and Montauk Renewables Volatility Contrast
Predicted Return Density |
Returns |
Pair Trading with Algonquin Power and Montauk Renewables
The main advantage of trading using opposite Algonquin Power and Montauk Renewables positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Algonquin Power position performs unexpectedly, Montauk Renewables 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 Montauk Renewables will offset losses from the drop in Montauk Renewables' long position.Algonquin Power vs. Algonquin Power Utilities | Algonquin Power vs. CMS Energy Corp | Algonquin Power vs. CMS Energy Corp | Algonquin Power vs. Argo Group 65 |
Montauk Renewables vs. Avista | Montauk Renewables vs. Allete Inc | Montauk Renewables vs. Black Hills | Montauk Renewables vs. Companhia Paranaense de |
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 Alpha Finder module to use alpha and beta coefficients to find investment opportunities after accounting for the risk.
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