Correlation Between Apple and Emera

Can any of the company-specific risk be diversified away by investing in both Apple 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 Apple and Emera into the same portfolio, which is an essential part of the fundamental portfolio management process.

By analyzing existing cross correlation between Apple Inc CDR and Emera Inc, you can compare the effects of market volatilities on Apple 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 Apple with a short position of Emera. Check out your portfolio center. Please also check ongoing floating volatility patterns of Apple and Emera.

Diversification Opportunities for Apple and Emera

0.8

Correlation Coefficient

Apple  Emera

Very poor diversification

The 3 months correlation between Apple and Emera is 0.8. Overlapping area represents the amount of risk that can be diversified away by holding Apple Inc CDR and Emera Inc in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Emera Inc and Apple 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 Apple Inc CDR 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 Inc has no effect on the direction of Apple i.e., Apple and Emera go up and down completely randomly.

Pair Corralation between Apple and Emera

Assuming the 90 days trading horizon Apple Inc CDR is expected to generate 1.42 times more return on investment than Emera. However, Apple is 1.42 times more volatile than Emera Inc. It trades about 0.11 of its potential returns per unit of risk. Emera Inc is currently generating about 0.06 per unit of risk. If you would invest  3,326  in Apple Inc CDR on October 4, 2024 and sell it today you would earn a total of  243.00  from holding Apple Inc CDR or generate 7.31% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Together
Strength	Strong
Accuracy	100.0%
Values	Daily Returns

Apple Inc CDR  vs.  Emera Inc

Apple Inc CDR

Risk-Adjusted Performance

8 of 100

OK

Compared to the overall equity markets, risk-adjusted returns on investments in Apple Inc CDR are ranked lower than 8 (%) of all global equities and portfolios over the last 90 days. In spite of rather unfluctuating technical and fundamental indicators, Apple may actually be approaching a critical reversion point that can send shares even higher in February 2025.

Emera Inc

Risk-Adjusted Performance

4 of 100

Insignificant

Compared to the overall equity markets, risk-adjusted returns on investments in Emera Inc are ranked lower than 4 (%) of all global equities and portfolios over the last 90 days. Despite somewhat strong basic indicators, Emera is not utilizing all of its potentials. The current stock price disturbance, may contribute to short-term losses for the investors.

Pair Trading with Apple and Emera

The main advantage of trading using opposite Apple and Emera positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Apple 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.

The idea behind Apple Inc CDR and Emera Inc 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 Premium Stories module to follow Macroaxis premium stories from verified contributors across different equity types, categories and coverage scope.