Correlation Between Hawkins and EMERA

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

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

Diversification Opportunities for Hawkins and EMERA

-0.13

Correlation Coefficient

Hawkins  EMERA

Good diversification

The 3 months correlation between Hawkins and EMERA is -0.13. Overlapping area represents the amount of risk that can be diversified away by holding Hawkins 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 Hawkins 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 Hawkins 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 Hawkins i.e., Hawkins and EMERA go up and down completely randomly.

Pair Corralation between Hawkins and EMERA

Given the investment horizon of 90 days Hawkins is expected to generate 1.07 times more return on investment than EMERA. However, Hawkins is 1.07 times more volatile than EMERA FIN LP. It trades about 0.09 of its potential returns per unit of risk. EMERA FIN LP is currently generating about -0.06 per unit of risk. If you would invest  11,677  in Hawkins on September 12, 2024 and sell it today you would earn a total of  1,575  from holding Hawkins or generate 13.49% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Against
Strength	Insignificant
Accuracy	95.24%
Values	Daily Returns

Hawkins  vs.  EMERA FIN LP

Hawkins

Risk-Adjusted Performance

7 of 100

OK

Compared to the overall equity markets, risk-adjusted returns on investments in Hawkins are ranked lower than 7 (%) of all global equities and portfolios over the last 90 days. In spite of very conflicting forward-looking signals, Hawkins displayed solid returns over the last few months and may actually be approaching a breakup point.

EMERA FIN LP

Risk-Adjusted Performance

0 of 100

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 latest weak performance, the Bond's basic indicators remain strong and the current disturbance on Wall Street may also be a sign of long term gains for EMERA FIN LP investors.

Pair Trading with Hawkins and EMERA

The main advantage of trading using opposite Hawkins and EMERA positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Hawkins 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 Hawkins 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 Portfolio Diagnostics module to use generated alerts and portfolio events aggregator to diagnose current holdings.