Correlation Between Fusion Fuel and Algonquin Power

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

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

Diversification Opportunities for Fusion Fuel and Algonquin Power

0.0

Correlation Coefficient

Fusion Fuel  Algonquin Power

Pay attention - limited upside

The 3 months correlation between Fusion and Algonquin is 0.0. Overlapping area represents the amount of risk that can be diversified away by holding Fusion Fuel Green 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 Fusion Fuel 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 Fusion Fuel Green 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 Fusion Fuel i.e., Fusion Fuel and Algonquin Power go up and down completely randomly.

Pair Corralation between Fusion Fuel and Algonquin Power

If you would invest  4.10  in Fusion Fuel Green on September 1, 2024 and sell it today you would lose (2.65) from holding Fusion Fuel Green or give up 64.63% of portfolio value over 90 days.

Time Period	3 Months [change]
Direction	Flat
Strength	Insignificant
Accuracy	1.59%
Values	Daily Returns

Fusion Fuel Green  vs.  Algonquin Power Utilities

Fusion Fuel Green

Risk-Adjusted Performance

1 of 100

Weak

Compared to the overall equity markets, risk-adjusted returns on investments in Fusion Fuel Green are ranked lower than 1 (%) of all global equities and portfolios over the last 90 days. In spite of fairly weak basic indicators, Fusion Fuel showed solid returns over the last few months and may actually be approaching a breakup point.

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. In spite of comparatively stable basic indicators, Algonquin Power is not utilizing all of its potentials. The current stock price uproar, may contribute to short-horizon losses for the private investors.

Pair Trading with Fusion Fuel and Algonquin Power

The main advantage of trading using opposite Fusion Fuel and Algonquin Power positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Fusion Fuel 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 Fusion Fuel Green 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 Sync Your Broker module to sync your existing holdings, watchlists, positions or portfolios from thousands of online brokerage services, banks, investment account aggregators and robo-advisors..