Correlation Between TPI Composites and Ameresco

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

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

Diversification Opportunities for TPI Composites and Ameresco

0.9

Correlation Coefficient

TPI Composites  Ameresco

Almost no diversification

The 3 months correlation between TPI and Ameresco is 0.9. Overlapping area represents the amount of risk that can be diversified away by holding TPI Composites and Ameresco in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Ameresco and TPI Composites 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 TPI Composites are associated (or correlated) with Ameresco. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Ameresco has no effect on the direction of TPI Composites i.e., TPI Composites and Ameresco go up and down completely randomly.

Pair Corralation between TPI Composites and Ameresco

Given the investment horizon of 90 days TPI Composites is expected to under-perform the Ameresco. In addition to that, TPI Composites is 1.68 times more volatile than Ameresco. It trades about -0.02 of its total potential returns per unit of risk. Ameresco is currently generating about -0.01 per unit of volatility. If you would invest  5,633  in Ameresco on September 13, 2024 and sell it today you would lose (3,117) from holding Ameresco or give up 55.33% of portfolio value over 90 days.

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

TPI Composites  vs.  Ameresco

TPI Composites

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days TPI Composites has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of weak performance in the last few months, the Stock's forward indicators remain rather sound which may send shares a bit higher in January 2025. The latest tumult may also be a sign of longer-term up-swing for the firm shareholders.

Ameresco

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Ameresco has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of unsteady performance in the last few months, the Stock's basic indicators remain rather sound which may send shares a bit higher in January 2025. The latest tumult may also be a sign of longer-term up-swing for the firm shareholders.

Pair Trading with TPI Composites and Ameresco

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

The idea behind TPI Composites and Ameresco 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 Investing Opportunities module to build portfolios using our predefined set of ideas and optimize them against your investing preferences.