Correlation Between Oatly Group and EMERA

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Can any of the company-specific risk be diversified away by investing in both Oatly Group 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 Oatly Group and EMERA into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Oatly Group AB and EMERA FIN LP, you can compare the effects of market volatilities on Oatly Group 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 Oatly Group with a short position of EMERA. Check out your portfolio center. Please also check ongoing floating volatility patterns of Oatly Group and EMERA.

Diversification Opportunities for Oatly Group and EMERA

0.79
  Correlation Coefficient

Poor diversification

The 3 months correlation between Oatly and EMERA is 0.79. Overlapping area represents the amount of risk that can be diversified away by holding Oatly Group AB and EMERA FIN LP in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on EMERA FIN LP and Oatly Group 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 Oatly Group AB 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 FIN LP has no effect on the direction of Oatly Group i.e., Oatly Group and EMERA go up and down completely randomly.

Pair Corralation between Oatly Group and EMERA

Given the investment horizon of 90 days Oatly Group AB is expected to under-perform the EMERA. But the stock apears to be less risky and, when comparing its historical volatility, Oatly Group AB is 9.91 times less risky than EMERA. The stock trades about -0.03 of its potential returns per unit of risk. The EMERA FIN LP is currently generating about 0.05 of returns per unit of risk over similar time horizon. If you would invest  8,238  in EMERA FIN LP on August 24, 2024 and sell it today you would lose (668.00) from holding EMERA FIN LP or give up 8.11% of portfolio value over 90 days.
Time Period3 Months [change]
DirectionMoves Together 
StrengthSignificant
Accuracy91.08%
ValuesDaily Returns

Oatly Group AB  vs.  EMERA FIN LP

 Performance 
       Timeline  
Oatly Group AB 

Risk-Adjusted Performance

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Over the last 90 days Oatly Group AB has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of uncertain performance in the last few months, the Stock's essential indicators remain fairly strong which may send shares a bit higher in December 2024. The current disturbance may also be a sign of long term up-swing for the company investors.
EMERA FIN LP 

Risk-Adjusted Performance

0 of 100

 
Weak
 
Strong
Very Weak
Over the last 90 days EMERA FIN LP has generated negative risk-adjusted returns adding no value to investors with long positions. Despite weak performance in the last few months, the Bond's basic indicators remain somewhat strong which may send shares a bit higher in December 2024. The current disturbance may also be a sign of long term up-swing for EMERA FIN LP investors.

Oatly Group and EMERA Volatility Contrast

   Predicted Return Density   
       Returns  

Pair Trading with Oatly Group and EMERA

The main advantage of trading using opposite Oatly Group and EMERA positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Oatly Group 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.
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The idea behind Oatly Group AB and EMERA FIN LP pairs trading is to make the combined position market-neutral, meaning the overall market's direction will not affect its win or loss (or potential downside or upside). This can be achieved by designing a pairs trade with two highly correlated stocks or equities that operate in a similar space or sector, making it possible to obtain profits through simple and relatively low-risk investment.
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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 Idea Optimizer module to use advanced portfolio builder with pre-computed micro ideas to build optimal portfolio .

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