Correlation Between Power Financial and Ag Growth

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

By analyzing existing cross correlation between Power Financial Corp and Ag Growth International, you can compare the effects of market volatilities on Power Financial and Ag Growth 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 Power Financial with a short position of Ag Growth. Check out your portfolio center. Please also check ongoing floating volatility patterns of Power Financial and Ag Growth.

Diversification Opportunities for Power Financial and Ag Growth

0.92

Correlation Coefficient

Power Financial  Ag Growth

Almost no diversification

The 3 months correlation between Power and AFN is 0.92. Overlapping area represents the amount of risk that can be diversified away by holding Power Financial Corp and Ag Growth International in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Ag Growth International and Power Financial 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 Power Financial Corp are associated (or correlated) with Ag Growth. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Ag Growth International has no effect on the direction of Power Financial i.e., Power Financial and Ag Growth go up and down completely randomly.

Pair Corralation between Power Financial and Ag Growth

Assuming the 90 days trading horizon Power Financial is expected to generate 3.84 times less return on investment than Ag Growth. But when comparing it to its historical volatility, Power Financial Corp is 4.14 times less risky than Ag Growth. It trades about 0.28 of its potential returns per unit of risk. Ag Growth International is currently generating about 0.26 of returns per unit of risk over similar time horizon. If you would invest  3,215  in Ag Growth International on April 24, 2025 and sell it today you would earn a total of  1,073  from holding Ag Growth International or generate 33.37% return on investment over 90 days.

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

Power Financial Corp  vs.  Ag Growth International

Power Financial Corp

Risk-Adjusted Performance

Solid

Compared to the overall equity markets, risk-adjusted returns on investments in Power Financial Corp are ranked lower than 21 (%) of all global equities and portfolios over the last 90 days. Despite somewhat unfluctuating technical and fundamental indicators, Power Financial may actually be approaching a critical reversion point that can send shares even higher in August 2025.

Ag Growth International

Risk-Adjusted Performance

Solid

Compared to the overall equity markets, risk-adjusted returns on investments in Ag Growth International are ranked lower than 20 (%) of all global equities and portfolios over the last 90 days. In spite of very unfluctuating basic indicators, Ag Growth displayed solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with Power Financial and Ag Growth

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

The idea behind Power Financial Corp and Ag Growth International 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 Watchlist Optimization module to optimize watchlists to build efficient portfolios or rebalance existing positions based on the mean-variance optimization algorithm.