Correlation Between Gol Intelligent and Algonquin Power

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

By analyzing existing cross correlation between Gol Intelligent Airlines and Algonquin Power Utilities, you can compare the effects of market volatilities on Gol Intelligent and Algonquin Power 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 Gol Intelligent with a short position of Algonquin Power. Check out your portfolio center. Please also check ongoing floating volatility patterns of Gol Intelligent and Algonquin Power.

Diversification Opportunities for Gol Intelligent and Algonquin Power

0.0

Correlation Coefficient

Gol Intelligent  Algonquin Power

Pay attention - limited upside

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

Pair Corralation between Gol Intelligent and Algonquin Power

Assuming the 90 days trading horizon Gol Intelligent Airlines is expected to generate 3.96 times more return on investment than Algonquin Power. However, Gol Intelligent is 3.96 times more volatile than Algonquin Power Utilities. It trades about -0.01 of its potential returns per unit of risk. Algonquin Power Utilities is currently generating about -0.03 per unit of risk. If you would invest  274.00  in Gol Intelligent Airlines on September 29, 2024 and sell it today you would lose (232.00) from holding Gol Intelligent Airlines or give up 84.67% of portfolio value over 90 days.

Time Period	3 Months [change]
Direction	Flat
Strength	Insignificant
Accuracy	100.0%
Values	Daily Returns

Gol Intelligent Airlines  vs.  Algonquin Power Utilities

Gol Intelligent Airlines

Risk-Adjusted Performance

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Very Weak

Over the last 90 days Gol Intelligent Airlines has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of comparatively stable basic indicators, Gol Intelligent is not utilizing all of its potentials. The newest stock price uproar, may contribute to short-horizon losses for the private investors.

Algonquin Power Utilities

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Algonquin Power Utilities has generated negative risk-adjusted returns adding no value to investors with long positions. Despite latest fragile performance, the Stock's basic indicators remain stable and the current disturbance on Wall Street may also be a sign of long-run gains for the company stockholders.

Pair Trading with Gol Intelligent and Algonquin Power

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

The idea behind Gol Intelligent Airlines and Algonquin Power Utilities 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 Companies Directory module to evaluate performance of over 100,000 Stocks, Funds, and ETFs against different fundamentals.