Correlation Between Algonquin Power and Apple

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

Diversification Opportunities for Algonquin Power and Apple

0.37
  Correlation Coefficient

Weak diversification

The 3 months correlation between Algonquin and Apple is 0.37. Overlapping area represents the amount of risk that can be diversified away by holding Algonquin Power Utilities and Apple Inc in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Apple Inc 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 Apple. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Apple Inc has no effect on the direction of Algonquin Power i.e., Algonquin Power and Apple go up and down completely randomly.

Pair Corralation between Algonquin Power and Apple

If you would invest  11,441  in Apple Inc on June 30, 2022 and sell it today you would earn a total of  3,735  from holding Apple Inc or generate 32.65% return on investment over 90 days.
Time Period3 Months [change]
DirectionMoves Together 
StrengthVery Weak
Accuracy0.0%
ValuesDaily Returns

Algonquin Power Utilities  vs.  Apple Inc

 Performance (%) 
       Timeline  
Algonquin Power Utilities 
Algonquin Performance
0 of 100
Over the last 90 days Algonquin Power Utilities has generated negative risk-adjusted returns adding no value to investors with long positions. Despite somewhat strong basic indicators, Algonquin Power is not utilizing all of its potentials. The current stock price disturbance, may contribute to short-term losses for the investors.
Apple Inc 
Apple Performance
4 of 100
Compared to the overall equity markets, risk-adjusted returns on investments in Apple Inc are ranked lower than 4 (%) of all global equities and portfolios over the last 90 days. Even with relatively weak basic indicators, Apple may actually be approaching a critical reversion point that can send shares even higher in October 2022.

Apple Price Channel

Algonquin Power and Apple Volatility Contrast

   Predicted Return Density   
       Returns  

Pair Trading with Algonquin Power and Apple

The main advantage of trading using opposite Algonquin Power and Apple positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Algonquin Power position performs unexpectedly, Apple 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 Apple will offset losses from the drop in Apple's long position.
The effect of pair diversification on risk is to reduce it, but we should note this doesn't apply to all risk types. When we trade pairs against Algonquin Power as a counterpart, there is always some inherent risk that will never be diversified away no matter what. This volatility limits the effect of tactical diversification using pair trading. Algonquin Power's systematic risk is the inherent uncertainty of the entire market, and therefore cannot be mitigated even by pair-trading it against the equity that is not highly correlated to it. On the other hand, Algonquin Power's unsystematic risk describes the types of risk that we can protect against, at least to some degree, by selecting a matching pair that is not perfectly correlated to Algonquin Power Utilities.
The idea behind Algonquin Power Utilities and Apple Inc 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.
Apple vs. Kibush Capital Corp
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 Stock Screener module to find equities using custom stock filter or screen asymmetry in trading patterns, price, volume, or investment outlook..

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