Correlation Between Canadian Utilities and Emera
Can any of the company-specific risk be diversified away by investing in both Canadian Utilities 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 Canadian Utilities and Emera into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Canadian Utilities Ltd and Emera Inc, you can compare the effects of market volatilities on Canadian Utilities 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 Canadian Utilities with a short position of Emera. Check out your portfolio center. Please also check ongoing floating volatility patterns of Canadian Utilities and Emera.
Diversification Opportunities for Canadian Utilities and Emera
0.49 | Correlation Coefficient |
Very weak diversification
The 3 months correlation between Canadian and Emera is 0.49. Overlapping area represents the amount of risk that can be diversified away by holding Canadian Utilities Ltd and Emera Inc in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Emera Inc and Canadian Utilities 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 Canadian Utilities Ltd 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 Canadian Utilities i.e., Canadian Utilities and Emera go up and down completely randomly.
Pair Corralation between Canadian Utilities and Emera
Assuming the 90 days trading horizon Canadian Utilities Ltd is expected to generate 0.38 times more return on investment than Emera. However, Canadian Utilities Ltd is 2.66 times less risky than Emera. It trades about 0.31 of its potential returns per unit of risk. Emera Inc is currently generating about 0.08 per unit of risk. If you would invest 2,417 in Canadian Utilities Ltd on September 23, 2024 and sell it today you would earn a total of 59.00 from holding Canadian Utilities Ltd or generate 2.44% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
Canadian Utilities Ltd vs. Emera Inc
Performance |
| Timeline |
| Canadian Utilities |
| Emera Inc |
Canadian Utilities and Emera Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Canadian Utilities and Emera
The main advantage of trading using opposite Canadian Utilities and Emera positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Canadian Utilities 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.| Canadian Utilities vs. VersaBank | Canadian Utilities vs. Royal Bank of | Canadian Utilities vs. Bank of Nova | Canadian Utilities vs. Bragg Gaming Group |
| Emera vs. Emera Pref F | Emera vs. Emera Srs C | Emera vs. Fortis Pref M | Emera vs. Brookfield Renewable Partners |
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 My Watchlist Analysis module to analyze my current watchlist and to refresh optimization strategy. Macroaxis watchlist is based on self-learning algorithm to remember stocks you like.
Other Complementary Tools
| My Watchlist Analysis Analyze my current watchlist and to refresh optimization strategy. Macroaxis watchlist is based on self-learning algorithm to remember stocks you like | |
| Fundamentals Comparison Compare fundamentals across multiple equities to find investing opportunities | |
| Efficient Frontier Plot and analyze your portfolio and positions against risk-return landscape of the market. | |
| Bollinger Bands Use Bollinger Bands indicator to analyze target price for a given investing horizon | |
| Instant Ratings Determine any equity ratings based on digital recommendations. Macroaxis instant equity ratings are based on combination of fundamental analysis and risk-adjusted market performance |