Correlation Between Altus Power and Excelerate Energy

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

By analyzing existing cross correlation between Altus Power and Excelerate Energy, you can compare the effects of market volatilities on Altus Power and Excelerate Energy 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 Excelerate Energy. Check out your portfolio center. Please also check ongoing floating volatility patterns of Altus Power and Excelerate Energy.

Diversification Opportunities for Altus Power and Excelerate Energy

0.75

Correlation Coefficient

Altus Power  Excelerate Energy

Poor diversification

The 3 months correlation between Altus and Excelerate is 0.75. Overlapping area represents the amount of risk that can be diversified away by holding Altus Power and Excelerate Energy in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Excelerate Energy 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 Excelerate Energy. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Excelerate Energy has no effect on the direction of Altus Power i.e., Altus Power and Excelerate Energy go up and down completely randomly.

Pair Corralation between Altus Power and Excelerate Energy

Given the investment horizon of 90 days Altus Power is expected to generate 1.55 times less return on investment than Excelerate Energy. In addition to that, Altus Power is 2.14 times more volatile than Excelerate Energy. It trades about 0.1 of its total potential returns per unit of risk. Excelerate Energy is currently generating about 0.33 per unit of volatility. If you would invest  2,347  in Excelerate Energy on September 5, 2024 and sell it today you would earn a total of  676.00  from holding Excelerate Energy or generate 28.8% return on investment over 90 days.

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

Altus Power  vs.  Excelerate Energy

Altus Power

Risk-Adjusted Performance

6 of 100

Modest

Compared to the overall equity markets, risk-adjusted returns on investments in Altus Power are ranked lower than 6 (%) of all global equities and portfolios over the last 90 days. In spite of comparatively weak basic indicators, Altus Power unveiled solid returns over the last few months and may actually be approaching a breakup point.

Excelerate Energy

Risk-Adjusted Performance

23 of 100

Solid

Compared to the overall equity markets, risk-adjusted returns on investments in Excelerate Energy are ranked lower than 23 (%) of all global equities and portfolios over the last 90 days. In spite of rather weak technical and fundamental indicators, Excelerate Energy exhibited solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with Altus Power and Excelerate Energy

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

The idea behind Altus Power and Excelerate Energy 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 Tickers module to use high-impact, comprehensive, and customizable stock tickers that can be easily integrated to any websites.