Correlation Between Emera and Apple
Can any of the company-specific risk be diversified away by investing in both Emera and Apple 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 and Apple into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Emera Inc and Apple Inc CDR, you can compare the effects of market volatilities on Emera and Apple 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 with a short position of Apple. Check out your portfolio center. Please also check ongoing floating volatility patterns of Emera and Apple.
Diversification Opportunities for Emera and Apple
Very weak diversification
The 3 months correlation between Emera and Apple is 0.56. Overlapping area represents the amount of risk that can be diversified away by holding Emera Inc and Apple Inc CDR in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Apple Inc CDR and Emera 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 Inc are associated (or correlated) with Apple. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Apple Inc CDR has no effect on the direction of Emera i.e., Emera and Apple go up and down completely randomly.
Pair Corralation between Emera and Apple
Assuming the 90 days trading horizon Emera Inc is expected to generate 0.66 times more return on investment than Apple. However, Emera Inc is 1.52 times less risky than Apple. It trades about 0.11 of its potential returns per unit of risk. Apple Inc CDR is currently generating about 0.07 per unit of risk. If you would invest 1,886 in Emera Inc on September 14, 2024 and sell it today you would earn a total of 524.00 from holding Emera Inc or generate 27.78% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
Emera Inc vs. Apple Inc CDR
Performance |
| Timeline |
| Emera Inc |
| Apple Inc CDR |
Emera and Apple Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Emera and Apple
The main advantage of trading using opposite Emera and Apple positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Emera position performs unexpectedly, Apple 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 Apple will offset losses from the drop in Apple's long position.| Emera vs. Emera Pref F | Emera vs. Emera Srs C | Emera vs. Fortis Pref M | Emera vs. Brookfield Renewable Partners |
| Apple vs. A W FOOD | Apple vs. Canadian Utilities Limited | Apple vs. North American Construction | Apple vs. First National Financial |
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 Technical Analysis module to check basic technical indicators and analysis based on most latest market data.
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