Correlation Between Algonquin Power and Federal Home
Can any of the company-specific risk be diversified away by investing in both Algonquin Power and Federal Home 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 Federal Home 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 Federal Home Loan, you can compare the effects of market volatilities on Algonquin Power and Federal Home 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 Federal Home. Check out your portfolio center. Please also check ongoing floating volatility patterns of Algonquin Power and Federal Home.
Diversification Opportunities for Algonquin Power and Federal Home
-0.34 | Correlation Coefficient |
Very good diversification
The 3 months correlation between Algonquin and Federal is -0.34. Overlapping area represents the amount of risk that can be diversified away by holding Algonquin Power Utilities and Federal Home Loan in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Federal Home Loan 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 Federal Home. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Federal Home Loan has no effect on the direction of Algonquin Power i.e., Algonquin Power and Federal Home go up and down completely randomly.
Pair Corralation between Algonquin Power and Federal Home
Given the investment horizon of 90 days Algonquin Power Utilities is expected to generate 0.16 times more return on investment than Federal Home. However, Algonquin Power Utilities is 6.28 times less risky than Federal Home. It trades about 0.13 of its potential returns per unit of risk. Federal Home Loan is currently generating about -0.04 per unit of risk. If you would invest 2,531 in Algonquin Power Utilities on September 12, 2025 and sell it today you would earn a total of 58.00 from holding Algonquin Power Utilities or generate 2.29% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Insignificant |
| Accuracy | 98.44% |
| Values | Daily Returns |
Algonquin Power Utilities vs. Federal Home Loan
Performance |
| Timeline |
| Algonquin Power Utilities |
| Federal Home Loan |
Algonquin Power and Federal Home Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Algonquin Power and Federal Home
The main advantage of trading using opposite Algonquin Power and Federal Home positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Algonquin Power position performs unexpectedly, Federal Home 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 Federal Home will offset losses from the drop in Federal Home's long position.| Algonquin Power vs. Tenaga Nasional Berhad | Algonquin Power vs. Evergy, | Algonquin Power vs. Terna Rete | Algonquin Power vs. Alliant Energy Corp |
| Federal Home vs. Investec Group | Federal Home vs. IG Group Holdings | Federal Home vs. IG Group Holdings | Federal Home vs. Unicaja Banco SA |
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 Odds Of Bankruptcy module to get analysis of equity chance of financial distress in the next 2 years.
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