Correlation Between Just Energy and Allete

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

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

Diversification Opportunities for Just Energy and Allete

0.0

Correlation Coefficient

Just Energy  Allete

Pay attention - limited upside

The 3 months correlation between Just and Allete is 0.0. Overlapping area represents the amount of risk that can be diversified away by holding Just Energy Group and Allete Inc in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Allete Inc and Just 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 Just Energy Group are associated (or correlated) with Allete. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Allete Inc has no effect on the direction of Just Energy i.e., Just Energy and Allete go up and down completely randomly.

Pair Corralation between Just Energy and Allete

If you would invest  5,852  in Allete Inc on January 24, 2024 and sell it today you would earn a total of  144.00  from holding Allete Inc or generate 2.46% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Flat
Strength	Insignificant
Accuracy	0.0%
Values	Daily Returns

Just Energy Group  vs.  Allete Inc

Just Energy Group

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Just Energy Group has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of rather sound technical and fundamental indicators, Just Energy is not utilizing all of its potentials. The current stock price tumult, may contribute to shorter-term losses for the shareholders.

Allete Inc

Risk-Adjusted Performance

5 of 100

Modest

Compared to the overall equity markets, risk-adjusted returns on investments in Allete Inc are ranked lower than 5 (%) of all global equities and portfolios over the last 90 days. In spite of rather sound essential indicators, Allete is not utilizing all of its potentials. The current stock price tumult, may contribute to shorter-term losses for the shareholders.

Pair Trading with Just Energy and Allete

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

The idea behind Just Energy Group and Allete Inc 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 Stock Screener module to find equities using a custom stock filter or screen asymmetry in trading patterns, price, volume, or investment outlook..