Correlation Between Amazon and Emera

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

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

Diversification Opportunities for Amazon and Emera

0.48

Correlation Coefficient

Amazon  Emera

Very weak diversification

The 3 months correlation between Amazon and Emera is 0.48. Overlapping area represents the amount of risk that can be diversified away by holding Amazon Inc and Emera Pref F in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Emera Pref F and Amazon 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 Amazon Inc 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 Pref F has no effect on the direction of Amazon i.e., Amazon and Emera go up and down completely randomly.

Pair Corralation between Amazon and Emera

Given the investment horizon of 90 days Amazon Inc is expected to under-perform the Emera. In addition to that, Amazon is 1.82 times more volatile than Emera Pref F. It trades about -0.12 of its total potential returns per unit of risk. Emera Pref F is currently generating about 0.04 per unit of volatility. If you would invest  2,143  in Emera Pref F on December 30, 2024 and sell it today you would earn a total of  47.00  from holding Emera Pref F or generate 2.19% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Together
Strength	Weak
Accuracy	96.88%
Values	Daily Returns

Amazon Inc  vs.  Emera Pref F

Amazon Inc

Risk-Adjusted Performance

Very Weak

Over the last 90 days Amazon Inc has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of unsteady performance in the last few months, the Stock's basic indicators remain very healthy which may send shares a bit higher in April 2025. The recent disarray may also be a sign of long period up-swing for the firm investors.

Emera Pref F

Risk-Adjusted Performance

Insignificant

Compared to the overall equity markets, risk-adjusted returns on investments in Emera Pref F are ranked lower than 3 (%) 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 recent stock price disturbance, may contribute to short-term losses for the investors.

Pair Trading with Amazon and Emera

The main advantage of trading using opposite Amazon and Emera positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Amazon 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 Amazon Inc and Emera Pref F 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 Portfolio Suggestion module to get suggestions outside of your existing asset allocation including your own model portfolios.