Correlation Between Emera and AltaGas
Can any of the company-specific risk be diversified away by investing in both Emera and AltaGas 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 AltaGas into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Emera Inc and AltaGas, you can compare the effects of market volatilities on Emera and AltaGas 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 AltaGas. Check out your portfolio center. Please also check ongoing floating volatility patterns of Emera and AltaGas.
Diversification Opportunities for Emera and AltaGas
Weak diversification
The 3 months correlation between Emera and AltaGas is 0.37. Overlapping area represents the amount of risk that can be diversified away by holding Emera Inc and AltaGas in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on AltaGas 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 AltaGas. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of AltaGas has no effect on the direction of Emera i.e., Emera and AltaGas go up and down completely randomly.
Pair Corralation between Emera and AltaGas
Assuming the 90 days trading horizon Emera Inc is expected to generate 1.01 times more return on investment than AltaGas. However, Emera is 1.01 times more volatile than AltaGas. It trades about 0.08 of its potential returns per unit of risk. AltaGas is currently generating about 0.02 per unit of risk. If you would invest 5,052 in Emera Inc on September 3, 2024 and sell it today you would earn a total of 290.00 from holding Emera Inc or generate 5.74% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Very Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
Emera Inc vs. AltaGas
Performance |
| Timeline |
| Emera Inc |
| AltaGas |
Emera and AltaGas Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Emera and AltaGas
The main advantage of trading using opposite Emera and AltaGas positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Emera position performs unexpectedly, AltaGas 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 AltaGas will offset losses from the drop in AltaGas' long position.| Emera vs. Fortis Inc | Emera vs. Canadian Utilities Limited | Emera vs. TC Energy Corp | Emera vs. Capital Power |
| AltaGas vs. Pembina Pipeline Corp | AltaGas vs. Keyera Corp | AltaGas vs. Emera Inc | AltaGas vs. Algonquin Power Utilities |
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 Stocks Directory module to find actively traded stocks across global markets.
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