Correlation Between Avient Corp and EMERA

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

By analyzing existing cross correlation between Avient Corp and EMERA FIN LP, you can compare the effects of market volatilities on Avient Corp 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 Avient Corp with a short position of EMERA. Check out your portfolio center. Please also check ongoing floating volatility patterns of Avient Corp and EMERA.

Diversification Opportunities for Avient Corp and EMERA

0.55

Correlation Coefficient

Avient Corp  EMERA

Very weak diversification

The 3 months correlation between Avient and EMERA is 0.55. Overlapping area represents the amount of risk that can be diversified away by holding Avient Corp 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 Avient Corp 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 Avient Corp 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 Avient Corp i.e., Avient Corp and EMERA go up and down completely randomly.

Pair Corralation between Avient Corp and EMERA

Given the investment horizon of 90 days Avient Corp is expected to under-perform the EMERA. In addition to that, Avient Corp is 2.54 times more volatile than EMERA FIN LP. It trades about -0.06 of its total potential returns per unit of risk. EMERA FIN LP is currently generating about -0.05 per unit of volatility. If you would invest  8,315  in EMERA FIN LP on December 30, 2024 and sell it today you would lose (212.00) from holding EMERA FIN LP or give up 2.55% of portfolio value over 90 days.

Time Period	3 Months [change]
Direction	Moves Together
Strength	Weak
Accuracy	96.77%
Values	Daily Returns

Avient Corp  vs.  EMERA FIN LP

Avient Corp

Risk-Adjusted Performance

Very Weak

Over the last 90 days Avient Corp has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of latest weak performance, the Stock's basic indicators remain stable and the newest uproar on Wall Street may also be a sign of mid-term gains for the firm private investors.

EMERA FIN LP

Risk-Adjusted Performance

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 somewhat strong basic indicators, EMERA is not utilizing all of its potentials. The latest stock price disturbance, may contribute to short-term losses for the investors.

Pair Trading with Avient Corp and EMERA

The main advantage of trading using opposite Avient Corp and EMERA positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Avient Corp 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 Avient Corp 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 Analyzer module to analyze all characteristics, volatility and risk-adjusted return of Macroaxis ideas.