Correlation Between Algonquin Power and Metalero Mining

Can any of the company-specific risk be diversified away by investing in both Algonquin Power and Metalero Mining 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 Metalero Mining 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 Metalero Mining Corp, you can compare the effects of market volatilities on Algonquin Power and Metalero Mining 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 Metalero Mining. Check out your portfolio center. Please also check ongoing floating volatility patterns of Algonquin Power and Metalero Mining.

Diversification Opportunities for Algonquin Power and Metalero Mining

-0.43

Correlation Coefficient

Algonquin Power  Metalero Mining

Very good diversification

The 3 months correlation between Algonquin and Metalero is -0.43. Overlapping area represents the amount of risk that can be diversified away by holding Algonquin Power Utilities and Metalero Mining Corp in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Metalero Mining Corp 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 Metalero Mining. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Metalero Mining Corp has no effect on the direction of Algonquin Power i.e., Algonquin Power and Metalero Mining go up and down completely randomly.

Pair Corralation between Algonquin Power and Metalero Mining

Assuming the 90 days trading horizon Algonquin Power Utilities is expected to generate 0.23 times more return on investment than Metalero Mining. However, Algonquin Power Utilities is 4.32 times less risky than Metalero Mining. It trades about 0.08 of its potential returns per unit of risk. Metalero Mining Corp is currently generating about 0.01 per unit of risk. If you would invest  2,348  in Algonquin Power Utilities on September 21, 2024 and sell it today you would earn a total of  77.00  from holding Algonquin Power Utilities or generate 3.28% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Against
Strength	Very Weak
Accuracy	98.44%
Values	Daily Returns

Algonquin Power Utilities  vs.  Metalero Mining Corp

Algonquin Power Utilities

Risk-Adjusted Performance

6 of 100

Modest

Compared to the overall equity markets, risk-adjusted returns on investments in Algonquin Power Utilities are ranked lower than 6 (%) of all global equities and portfolios over the last 90 days. Despite somewhat strong basic indicators, Algonquin Power is not utilizing all of its potentials. The recent stock price disturbance, may contribute to short-term losses for the investors.

Metalero Mining Corp

Risk-Adjusted Performance

1 of 100

Weak

Compared to the overall equity markets, risk-adjusted returns on investments in Metalero Mining Corp are ranked lower than 1 (%) of all global equities and portfolios over the last 90 days. In spite of fairly stable basic indicators, Metalero Mining is not utilizing all of its potentials. The recent stock price fuss, may contribute to near-short-term losses for the sophisticated investors.

Pair Trading with Algonquin Power and Metalero Mining

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

The idea behind Algonquin Power Utilities and Metalero Mining Corp 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 Equity Search module to search for actively traded equities including funds and ETFs from over 30 global markets.