Correlation Between AltaGas and Emera
Can any of the company-specific risk be diversified away by investing in both AltaGas and Emera 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 AltaGas and Emera into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between AltaGas and Emera Inc, you can compare the effects of market volatilities on AltaGas and Emera 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 AltaGas with a short position of Emera. Check out your portfolio center. Please also check ongoing floating volatility patterns of AltaGas and Emera.
Diversification Opportunities for AltaGas and Emera
Weak diversification
The 3 months correlation between AltaGas and Emera is 0.37. Overlapping area represents the amount of risk that can be diversified away by holding AltaGas and Emera Inc in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Emera Inc and AltaGas 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 AltaGas are associated (or correlated) with Emera. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Emera Inc has no effect on the direction of AltaGas i.e., AltaGas and Emera go up and down completely randomly.
Pair Corralation between AltaGas and Emera
Assuming the 90 days trading horizon AltaGas is expected to generate 3.43 times less return on investment than Emera. But when comparing it to its historical volatility, AltaGas is 1.01 times less risky than Emera. It trades about 0.02 of its potential returns per unit of risk. Emera Inc is currently generating about 0.08 of returns per unit of risk over similar time horizon. If you would invest 5,052 in Emera Inc on September 3, 2024 and sell it today you would earn a total of 290.00 from holding Emera Inc or generate 5.74% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Very Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
AltaGas vs. Emera Inc
Performance |
| Timeline |
| AltaGas |
| Emera Inc |
AltaGas and Emera Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with AltaGas and Emera
The main advantage of trading using opposite AltaGas and Emera positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if AltaGas position performs unexpectedly, Emera 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 Emera will offset losses from the drop in Emera's long position.| AltaGas vs. Pembina Pipeline Corp | AltaGas vs. Keyera Corp | AltaGas vs. Emera Inc | AltaGas vs. Algonquin Power Utilities |
| Emera vs. Fortis Inc | Emera vs. Canadian Utilities Limited | Emera vs. TC Energy Corp | Emera vs. Capital Power |
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 Cryptocurrency Center module to build and monitor diversified portfolio of extremely risky digital assets and cryptocurrency.
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