Correlation Between Algonquin Power and Emera
Can any of the company-specific risk be diversified away by investing in both Algonquin Power 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 Algonquin Power and Emera 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 Emera Inc, you can compare the effects of market volatilities on Algonquin Power 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 Algonquin Power with a short position of Emera. Check out your portfolio center. Please also check ongoing floating volatility patterns of Algonquin Power and Emera.
Diversification Opportunities for Algonquin Power and Emera
0.34 | Correlation Coefficient |
Weak diversification
The 3 months correlation between Algonquin and Emera is 0.34. Overlapping area represents the amount of risk that can be diversified away by holding Algonquin Power Utilities and Emera Inc in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Emera Inc 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 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 Algonquin Power i.e., Algonquin Power and Emera go up and down completely randomly.
Pair Corralation between Algonquin Power and Emera
Assuming the 90 days trading horizon Algonquin Power Utilities is expected to under-perform the Emera. In addition to that, Algonquin Power is 1.23 times more volatile than Emera Inc. It trades about -0.07 of its total potential returns per unit of risk. Emera Inc is currently generating about -0.07 per unit of volatility. If you would invest 5,288 in Emera Inc on August 25, 2024 and sell it today you would lose (96.00) from holding Emera Inc or give up 1.82% of portfolio value over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Very Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
Algonquin Power Utilities vs. Emera Inc
Performance |
| Timeline |
| Algonquin Power Utilities |
| Emera Inc |
Algonquin Power and Emera Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Algonquin Power and Emera
The main advantage of trading using opposite Algonquin Power and Emera positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Algonquin Power 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.| Algonquin Power vs. Fortis Inc | Algonquin Power vs. Enbridge | Algonquin Power vs. Telus Corp | Algonquin Power vs. Brookfield Renewable Partners |
| 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 Competition Analyzer module to analyze and compare many basic indicators for a group of related or unrelated entities.
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