Correlation Between Energy Of and AltaGas

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

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

Diversification Opportunities for Energy Of and AltaGas

0.37

Correlation Coefficient

Energy Of  AltaGas

Weak diversification

The 3 months correlation between Energy and AltaGas is 0.37. Overlapping area represents the amount of risk that can be diversified away by holding Energy of Minas and AltaGas in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on AltaGas and Energy Of 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 Energy of Minas are associated (or correlated) with AltaGas. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of AltaGas has no effect on the direction of Energy Of i.e., Energy Of and AltaGas go up and down completely randomly.

Pair Corralation between Energy Of and AltaGas

Assuming the 90 days horizon Energy of Minas is expected to under-perform the AltaGas. In addition to that, Energy Of is 1.67 times more volatile than AltaGas. It trades about -0.05 of its total potential returns per unit of risk. AltaGas is currently generating about -0.08 per unit of volatility. If you would invest  2,453  in AltaGas on September 27, 2024 and sell it today you would lose (155.00) from holding AltaGas or give up 6.32% of portfolio value over 90 days.

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

Energy of Minas  vs.  AltaGas

Energy of Minas

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Energy of Minas has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of latest weak performance, the Stock's basic indicators remain sound and the latest tumult on Wall Street may also be a sign of longer-term gains for the firm shareholders.

AltaGas

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days AltaGas has generated negative risk-adjusted returns adding no value to investors with long positions. Despite nearly stable technical and fundamental indicators, AltaGas is not utilizing all of its potentials. The latest stock price disturbance, may contribute to mid-run losses for the stockholders.

Pair Trading with Energy Of and AltaGas

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

The idea behind Energy of Minas and AltaGas 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.

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 Transaction History module to view history of all your transactions and understand their impact on performance.