Correlation Between Capital Power and Emera
Can any of the company-specific risk be diversified away by investing in both Capital 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 Capital Power and Emera into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Capital Power and Emera Inc, you can compare the effects of market volatilities on Capital 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 Capital Power with a short position of Emera. Check out your portfolio center. Please also check ongoing floating volatility patterns of Capital Power and Emera.
Diversification Opportunities for Capital Power and Emera
0.45 | Correlation Coefficient |
Very weak diversification
The 3 months correlation between Capital and Emera is 0.45. Overlapping area represents the amount of risk that can be diversified away by holding Capital Power and Emera Inc in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Emera Inc and Capital 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 Capital Power 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 Capital Power i.e., Capital Power and Emera go up and down completely randomly.
Pair Corralation between Capital Power and Emera
Assuming the 90 days trading horizon Capital Power is expected to under-perform the Emera. In addition to that, Capital Power is 4.04 times more volatile than Emera Inc. It trades about -0.18 of its total potential returns per unit of risk. Emera Inc is currently generating about 0.14 per unit of volatility. If you would invest 5,353 in Emera Inc on November 3, 2024 and sell it today you would earn a total of 169.00 from holding Emera Inc or generate 3.16% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
Capital Power vs. Emera Inc
Performance |
| Timeline |
| Capital Power |
| Emera Inc |
Capital Power and Emera Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Capital Power and Emera
The main advantage of trading using opposite Capital Power and Emera positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Capital 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.| Capital Power vs. Canadian Utilities Limited | Capital Power vs. Emera Inc | Capital Power vs. Keyera Corp | Capital Power vs. Northland Power |
| 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 Earnings Calls module to check upcoming earnings announcements updated hourly across public exchanges.
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