Correlation Between Algonquin Power and CompoSecure
Can any of the company-specific risk be diversified away by investing in both Algonquin Power and CompoSecure 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 CompoSecure 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 CompoSecure, you can compare the effects of market volatilities on Algonquin Power and CompoSecure 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 CompoSecure. Check out your portfolio center. Please also check ongoing floating volatility patterns of Algonquin Power and CompoSecure.
Diversification Opportunities for Algonquin Power and CompoSecure
0.1 | Correlation Coefficient |
Average diversification
The 3 months correlation between Algonquin and CompoSecure is 0.1. Overlapping area represents the amount of risk that can be diversified away by holding Algonquin Power Utilities and CompoSecure in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on CompoSecure 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 CompoSecure. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of CompoSecure has no effect on the direction of Algonquin Power i.e., Algonquin Power and CompoSecure go up and down completely randomly.
Pair Corralation between Algonquin Power and CompoSecure
Considering the 90-day investment horizon Algonquin Power is expected to generate 8.14 times less return on investment than CompoSecure. But when comparing it to its historical volatility, Algonquin Power Utilities is 2.94 times less risky than CompoSecure. It trades about 0.07 of its potential returns per unit of risk. CompoSecure is currently generating about 0.2 of returns per unit of risk over similar time horizon. If you would invest 585.00 in CompoSecure on May 31, 2025 and sell it today you would earn a total of 621.00 from holding CompoSecure or generate 106.15% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Insignificant |
| Accuracy | 98.39% |
| Values | Daily Returns |
Algonquin Power Utilities vs. CompoSecure
Performance |
| Timeline |
| Algonquin Power Utilities |
| CompoSecure |
Algonquin Power and CompoSecure Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Algonquin Power and CompoSecure
The main advantage of trading using opposite Algonquin Power and CompoSecure positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Algonquin Power position performs unexpectedly, CompoSecure 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 CompoSecure will offset losses from the drop in CompoSecure's long position.| Algonquin Power vs. Brookfield Renewable Partners | Algonquin Power vs. Brookfield Renewable Corp | Algonquin Power vs. Renew Energy Global | Algonquin Power vs. Fortis Inc |
| CompoSecure vs. Arts Way Manufacturing Co | CompoSecure vs. China Natural Resources | CompoSecure vs. Euro Tech Holdings | CompoSecure vs. Deswell Industries |
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 Diagnostics module to use generated alerts and portfolio events aggregator to diagnose current holdings.
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