Correlation Between Alphabet and Emera Pref

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

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

Diversification Opportunities for Alphabet and Emera Pref

0.2

Correlation Coefficient

Alphabet  Emera Pref

Modest diversification

The 3 months correlation between Alphabet and Emera is 0.2. Overlapping area represents the amount of risk that can be diversified away by holding Alphabet Inc CDR and Emera Pref A in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Emera Pref A and Alphabet 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 Alphabet Inc CDR are associated (or correlated) with Emera Pref. 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 A has no effect on the direction of Alphabet i.e., Alphabet and Emera Pref go up and down completely randomly.

Pair Corralation between Alphabet and Emera Pref

Assuming the 90 days trading horizon Alphabet Inc CDR is expected to under-perform the Emera Pref. In addition to that, Alphabet is 2.37 times more volatile than Emera Pref A. It trades about -0.12 of its total potential returns per unit of risk. Emera Pref A is currently generating about 0.07 per unit of volatility. If you would invest  1,615  in Emera Pref A on December 24, 2024 and sell it today you would earn a total of  56.00  from holding Emera Pref A or generate 3.47% return on investment over 90 days.

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

Alphabet Inc CDR  vs.  Emera Pref A

Alphabet CDR

Risk-Adjusted Performance

Very Weak

Over the last 90 days Alphabet Inc CDR has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of unfluctuating performance in the last few months, the Stock's technical and fundamental indicators remain rather sound which may send shares a bit higher in April 2025. The latest tumult may also be a sign of longer-term up-swing for the firm shareholders.

Emera Pref A

Risk-Adjusted Performance

Modest

Compared to the overall equity markets, risk-adjusted returns on investments in Emera Pref A are ranked lower than 5 (%) of all global equities and portfolios over the last 90 days. Despite somewhat strong basic indicators, Emera Pref is not utilizing all of its potentials. The recent stock price disturbance, may contribute to short-term losses for the investors.

Pair Trading with Alphabet and Emera Pref

The main advantage of trading using opposite Alphabet and Emera Pref positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Alphabet position performs unexpectedly, Emera Pref 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 Pref will offset losses from the drop in Emera Pref's long position.

The idea behind Alphabet Inc CDR and Emera Pref A 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.

Check out your portfolio center.

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 Anywhere module to track or share privately all of your investments from the convenience of any device.