Correlation Between Emera and ATCO
Can any of the company-specific risk be diversified away by investing in both Emera and ATCO 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 ATCO into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Emera Inc and ATCO, you can compare the effects of market volatilities on Emera and ATCO 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 ATCO. Check out your portfolio center. Please also check ongoing floating volatility patterns of Emera and ATCO.
Diversification Opportunities for Emera and ATCO
Very weak diversification
The 3 months correlation between Emera and ATCO is 0.43. Overlapping area represents the amount of risk that can be diversified away by holding Emera Inc and ATCO in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on ATCO 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 ATCO. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of ATCO has no effect on the direction of Emera i.e., Emera and ATCO go up and down completely randomly.
Pair Corralation between Emera and ATCO
Assuming the 90 days trading horizon Emera Inc is expected to generate 0.83 times more return on investment than ATCO. However, Emera Inc is 1.21 times less risky than ATCO. It trades about 0.4 of its potential returns per unit of risk. ATCO is currently generating about 0.26 per unit of risk. If you would invest 5,050 in Emera Inc on September 4, 2024 and sell it today you would earn a total of 377.00 from holding Emera Inc or generate 7.47% 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. ATCO
Performance |
| Timeline |
| Emera Inc |
| ATCO |
Emera and ATCO Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Emera and ATCO
The main advantage of trading using opposite Emera and ATCO positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Emera position performs unexpectedly, ATCO 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 ATCO will offset losses from the drop in ATCO's long position.| Emera vs. Fortis Inc | Emera vs. Canadian Utilities Limited | Emera vs. TC Energy Corp | Emera vs. Capital Power |
| ATCO vs. Canadian Utilities Limited | ATCO vs. Emera Inc | ATCO vs. Capital Power | ATCO vs. Transcontinental |
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 Portfolio Manager module to state of the art Portfolio Manager to monitor and improve performance of your invested capital.
Other Complementary Tools
| Global Markets Map Get a quick overview of global market snapshot using zoomable world map. Drill down to check world indexes | |
| Equity Search Search for actively traded equities including funds and ETFs from over 30 global markets | |
| Stocks Directory Find actively traded stocks across global markets | |
| Portfolio Backtesting Avoid under-diversification and over-optimization by backtesting your portfolios | |
| 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 |