Correlation Between Clean Energy and Algonquin Power
Can any of the company-specific risk be diversified away by investing in both Clean Energy 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 Clean Energy and Algonquin Power into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Clean Energy Fuels and Algonquin Power Utilities, you can compare the effects of market volatilities on Clean Energy 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 Clean Energy with a short position of Algonquin Power. Check out your portfolio center. Please also check ongoing floating volatility patterns of Clean Energy and Algonquin Power.
Diversification Opportunities for Clean Energy and Algonquin Power
0.65 | Correlation Coefficient |
Poor diversification
The 3 months correlation between Clean and Algonquin is 0.65. Overlapping area represents the amount of risk that can be diversified away by holding Clean Energy Fuels 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 Clean Energy 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 Clean Energy Fuels 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 Clean Energy i.e., Clean Energy and Algonquin Power go up and down completely randomly.
Pair Corralation between Clean Energy and Algonquin Power
Assuming the 90 days horizon Clean Energy Fuels is expected to generate 1.56 times more return on investment than Algonquin Power. However, Clean Energy is 1.56 times more volatile than Algonquin Power Utilities. It trades about 0.15 of its potential returns per unit of risk. Algonquin Power Utilities is currently generating about 0.07 per unit of risk. If you would invest 123.00 in Clean Energy Fuels on April 23, 2025 and sell it today you would earn a total of 53.00 from holding Clean Energy Fuels or generate 43.09% return on investment over 90 days.
Time Period | 3 Months [change] |
Direction | Moves Together |
Strength | Significant |
Accuracy | 100.0% |
Values | Daily Returns |
Clean Energy Fuels vs. Algonquin Power Utilities
Performance |
Timeline |
Clean Energy Fuels |
Algonquin Power Utilities |
Clean Energy and Algonquin Power Volatility Contrast
Predicted Return Density |
Returns |
Pair Trading with Clean Energy and Algonquin Power
The main advantage of trading using opposite Clean Energy and Algonquin Power positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Clean Energy 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.Clean Energy vs. Hope Education Group | Clean Energy vs. Grand Canyon Education | Clean Energy vs. Geratherm Medical AG | Clean Energy vs. XTANT MEDICAL HLDGS |
Algonquin Power vs. Arrow Electronics | Algonquin Power vs. STMICROELECTRONICS | Algonquin Power vs. Titan Machinery | Algonquin Power vs. Penta Ocean Construction Co |
Check out your portfolio center.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 Holdings module to check your current holdings and cash postion to detemine if your portfolio needs rebalancing.
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