Correlation Between Algonquin Power and Patriot Battery

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

Diversification Opportunities for Algonquin Power and Patriot Battery

0.59

Correlation Coefficient

Algonquin Power  Patriot Battery

Very weak diversification

The 3 months correlation between Algonquin and Patriot is 0.59. Overlapping area represents the amount of risk that can be diversified away by holding Algonquin Power Utilities and Patriot Battery Metals in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Patriot Battery Metals 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 Patriot Battery. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Patriot Battery Metals has no effect on the direction of Algonquin Power i.e., Algonquin Power and Patriot Battery go up and down completely randomly.

Pair Corralation between Algonquin Power and Patriot Battery

Assuming the 90 days trading horizon Algonquin Power is expected to generate 9.13 times less return on investment than Patriot Battery. But when comparing it to its historical volatility, Algonquin Power Utilities is 10.43 times less risky than Patriot Battery. It trades about 0.21 of its potential returns per unit of risk. Patriot Battery Metals is currently generating about 0.19 of returns per unit of risk over similar time horizon. If you would invest  245.00  in Patriot Battery Metals on April 25, 2025 and sell it today you would earn a total of  184.00  from holding Patriot Battery Metals or generate 75.1% return on investment over 90 days.

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

Algonquin Power Utilities  vs.  Patriot Battery Metals

Algonquin Power Utilities

Risk-Adjusted Performance

Solid

Compared to the overall equity markets, risk-adjusted returns on investments in Algonquin Power Utilities are ranked lower than 16 (%) of all global equities and portfolios over the last 90 days. Despite somewhat unfluctuating basic indicators, Algonquin Power may actually be approaching a critical reversion point that can send shares even higher in August 2025.

Patriot Battery Metals

Risk-Adjusted Performance

Good

Compared to the overall equity markets, risk-adjusted returns on investments in Patriot Battery Metals are ranked lower than 14 (%) of all global equities and portfolios over the last 90 days. In spite of very uncertain basic indicators, Patriot Battery displayed solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with Algonquin Power and Patriot Battery

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

The idea behind Algonquin Power Utilities and Patriot Battery Metals 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 Commodity Directory module to find actively traded commodities issued by global exchanges.