Correlation Between Altus Power and Global X

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

By analyzing existing cross correlation between Altus Power and Global X YieldCo, you can compare the effects of market volatilities on Altus Power and Global X 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 Altus Power with a short position of Global X. Check out your portfolio center. Please also check ongoing floating volatility patterns of Altus Power and Global X.

Diversification Opportunities for Altus Power and Global X

-0.68

Correlation Coefficient

Altus Power  Global X

Excellent diversification

The 3 months correlation between Altus and Global is -0.68. Overlapping area represents the amount of risk that can be diversified away by holding Altus Power and Global X YieldCo in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Global X YieldCo and Altus 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 Altus Power are associated (or correlated) with Global X. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Global X YieldCo has no effect on the direction of Altus Power i.e., Altus Power and Global X go up and down completely randomly.

Pair Corralation between Altus Power and Global X

Given the investment horizon of 90 days Altus Power is expected to generate 4.38 times more return on investment than Global X. However, Altus Power is 4.38 times more volatile than Global X YieldCo. It trades about 0.01 of its potential returns per unit of risk. Global X YieldCo is currently generating about -0.1 per unit of risk. If you would invest  402.00  in Altus Power on September 23, 2024 and sell it today you would lose (47.00) from holding Altus Power or give up 11.69% of portfolio value over 90 days.

Time Period	3 Months [change]
Direction	Moves Against
Strength	Weak
Accuracy	100.0%
Values	Daily Returns

Altus Power  vs.  Global X YieldCo

Altus Power

Risk-Adjusted Performance

3 of 100

Insignificant

Compared to the overall equity markets, risk-adjusted returns on investments in Altus Power are ranked lower than 3 (%) of all global equities and portfolios over the last 90 days. In spite of comparatively weak basic indicators, Altus Power unveiled solid returns over the last few months and may actually be approaching a breakup point.

Global X YieldCo

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Global X YieldCo has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of weak performance in the last few months, the Etf's fundamental indicators remain very healthy which may send shares a bit higher in January 2025. The recent disarray may also be a sign of long period up-swing for the ETF investors.

Pair Trading with Altus Power and Global X

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

The idea behind Altus Power and Global X YieldCo 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 Share Portfolio module to track or share privately all of your investments from the convenience of any device.