Correlation Between Emera Pref and Emera Srs
Can any of the company-specific risk be diversified away by investing in both Emera Pref and Emera Srs 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 Emera Pref and Emera Srs into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Emera Pref A and Emera Srs C, you can compare the effects of market volatilities on Emera Pref and Emera Srs 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 Emera Pref with a short position of Emera Srs. Check out your portfolio center. Please also check ongoing floating volatility patterns of Emera Pref and Emera Srs.
Diversification Opportunities for Emera Pref and Emera Srs
0.91 | Correlation Coefficient |
Almost no diversification
The 3 months correlation between Emera and Emera is 0.91. Overlapping area represents the amount of risk that can be diversified away by holding Emera Pref A and Emera Srs C in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Emera Srs C and Emera Pref 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 Emera Pref A are associated (or correlated) with Emera Srs. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Emera Srs C has no effect on the direction of Emera Pref i.e., Emera Pref and Emera Srs go up and down completely randomly.
Pair Corralation between Emera Pref and Emera Srs
Assuming the 90 days trading horizon Emera Pref A is expected to generate 1.2 times more return on investment than Emera Srs. However, Emera Pref is 1.2 times more volatile than Emera Srs C. It trades about 0.55 of its potential returns per unit of risk. Emera Srs C is currently generating about 0.23 per unit of risk. If you would invest 1,615 in Emera Pref A on October 25, 2024 and sell it today you would earn a total of 145.00 from holding Emera Pref A or generate 8.98% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Very Strong |
| Accuracy | 95.0% |
| Values | Daily Returns |
Emera Pref A vs. Emera Srs C
Performance |
| Timeline |
| Emera Pref A |
| Emera Srs C |
Emera Pref and Emera Srs Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Emera Pref and Emera Srs
The main advantage of trading using opposite Emera Pref and Emera Srs positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Emera Pref position performs unexpectedly, Emera Srs 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 Srs will offset losses from the drop in Emera Srs' long position.| Emera Pref vs. Mako Mining Corp | Emera Pref vs. Rocky Mountain Liquor | Emera Pref vs. T2 Metals Corp | Emera Pref vs. Magna Mining |
| Emera Srs vs. AKITA Drilling | Emera Srs vs. Sun Peak Metals | Emera Srs vs. Nano One Materials | Emera Srs vs. Western Copper and |
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 Positions Ratings module to determine portfolio positions ratings based on digital equity recommendations. Macroaxis instant position ratings are based on combination of fundamental analysis and risk-adjusted market performance.
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