Correlation Between Algonquin Power and SPoT Coffee

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

Diversification Opportunities for Algonquin Power and SPoT Coffee

0.0
  Correlation Coefficient

Pay attention - limited upside

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

Pair Corralation between Algonquin Power and SPoT Coffee

If you would invest  2,359  in Algonquin Power Utilities on April 20, 2025 and sell it today you would earn a total of  176.00  from holding Algonquin Power Utilities or generate 7.46% return on investment over 90 days.
Time Period3 Months [change]
DirectionFlat 
StrengthInsignificant
Accuracy100.0%
ValuesDaily Returns

Algonquin Power Utilities  vs.  SPoT Coffee

 Performance 
       Timeline  
Algonquin Power Utilities 

Risk-Adjusted Performance

Solid

 
Weak
 
Strong
Compared to the overall equity markets, risk-adjusted returns on investments in Algonquin Power Utilities are ranked lower than 17 (%) 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.
SPoT Coffee 

Risk-Adjusted Performance

Very Weak

 
Weak
 
Strong
Over the last 90 days SPoT Coffee has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of fairly stable basic indicators, SPoT Coffee is not utilizing all of its potentials. The recent stock price fuss, may contribute to near-short-term losses for the sophisticated investors.

Algonquin Power and SPoT Coffee Volatility Contrast

   Predicted Return Density   
       Returns  

Pair Trading with Algonquin Power and SPoT Coffee

The main advantage of trading using opposite Algonquin Power and SPoT Coffee positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Algonquin Power position performs unexpectedly, SPoT Coffee 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 SPoT Coffee will offset losses from the drop in SPoT Coffee's long position.
The idea behind Algonquin Power Utilities and SPoT Coffee 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 Portfolio Manager module to state of the art Portfolio Manager to monitor and improve performance of your invested capital.

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