Correlation Between Dorel Industries and Emera

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

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

Diversification Opportunities for Dorel Industries and Emera

-0.4

Correlation Coefficient

Dorel Industries  Emera

Very good diversification

The 3 months correlation between Dorel and Emera is -0.4. Overlapping area represents the amount of risk that can be diversified away by holding Dorel Industries and Emera Inc in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Emera Inc and Dorel Industries 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 Dorel Industries 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 Dorel Industries i.e., Dorel Industries and Emera go up and down completely randomly.

Pair Corralation between Dorel Industries and Emera

Assuming the 90 days trading horizon Dorel Industries is expected to under-perform the Emera. In addition to that, Dorel Industries is 3.1 times more volatile than Emera Inc. It trades about -0.01 of its total potential returns per unit of risk. Emera Inc is currently generating about 0.1 per unit of volatility. If you would invest  1,910  in Emera Inc on October 5, 2024 and sell it today you would earn a total of  490.00  from holding Emera Inc or generate 25.65% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Against
Strength	Very Weak
Accuracy	100.0%
Values	Daily Returns

Dorel Industries  vs.  Emera Inc

Dorel Industries

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Dorel Industries has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of weak performance in the last few months, the Stock's basic indicators remain comparatively stable which may send shares a bit higher in February 2025. The newest uproar may also be a sign of mid-term up-swing for the firm private investors.

Emera Inc

Risk-Adjusted Performance

5 of 100

Modest

Compared to the overall equity markets, risk-adjusted returns on investments in Emera Inc are ranked lower than 5 (%) 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 Dorel Industries and Emera

The main advantage of trading using opposite Dorel Industries and Emera positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Dorel Industries 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 Dorel Industries 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 Portfolio Dashboard module to portfolio dashboard that provides centralized access to all your investments.