Correlation Between Atlantica Sustainable and Avista

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

By analyzing existing cross correlation between Atlantica Sustainable Infrastructure and Avista, you can compare the effects of market volatilities on Atlantica Sustainable and Avista 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 Atlantica Sustainable with a short position of Avista. Check out your portfolio center. Please also check ongoing floating volatility patterns of Atlantica Sustainable and Avista.

Diversification Opportunities for Atlantica Sustainable and Avista

-0.46

Correlation Coefficient

Atlantica Sustainable  Avista

Very good diversification

The 3 months correlation between Atlantica and Avista is -0.46. Overlapping area represents the amount of risk that can be diversified away by holding Atlantica Sustainable Infrastr and Avista in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Avista and Atlantica Sustainable 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 Atlantica Sustainable Infrastructure are associated (or correlated) with Avista. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Avista has no effect on the direction of Atlantica Sustainable i.e., Atlantica Sustainable and Avista go up and down completely randomly.

Pair Corralation between Atlantica Sustainable and Avista

Allowing for the 90-day total investment horizon Atlantica Sustainable Infrastructure is expected to under-perform the Avista. In addition to that, Atlantica Sustainable is 1.25 times more volatile than Avista. It trades about 0.0 of its total potential returns per unit of risk. Avista is currently generating about 0.01 per unit of volatility. If you would invest  3,735  in Avista on August 19, 2024 and sell it today you would earn a total of  40.00  from holding Avista or generate 1.07% return on investment over 90 days.

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

Atlantica Sustainable Infrastr  vs.  Avista

Atlantica Sustainable

Risk-Adjusted Performance

18 of 100

Solid

Compared to the overall equity markets, risk-adjusted returns on investments in Atlantica Sustainable Infrastructure are ranked lower than 18 (%) of all global equities and portfolios over the last 90 days. In spite of fairly strong basic indicators, Atlantica Sustainable is not utilizing all of its potentials. The recent stock price disturbance, may contribute to short-term losses for the investors.

Avista

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Avista has generated negative risk-adjusted returns adding no value to investors with long positions. Despite somewhat strong basic indicators, Avista is not utilizing all of its potentials. The latest stock price disturbance, may contribute to short-term losses for the investors.

Pair Trading with Atlantica Sustainable and Avista

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

The idea behind Atlantica Sustainable Infrastructure and Avista 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 Commodity Channel module to use Commodity Channel Index to analyze current equity momentum.