Correlation Between Keyera Corp and Emera

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

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

Diversification Opportunities for Keyera Corp and Emera

0.24

Correlation Coefficient

Keyera Corp  Emera

Modest diversification

The 3 months correlation between Keyera and Emera is 0.24. Overlapping area represents the amount of risk that can be diversified away by holding Keyera Corp and Emera Inc in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Emera Inc and Keyera 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 Keyera 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 Inc has no effect on the direction of Keyera Corp i.e., Keyera Corp and Emera go up and down completely randomly.

Pair Corralation between Keyera Corp and Emera

Assuming the 90 days trading horizon Keyera Corp is expected to generate 0.72 times more return on investment than Emera. However, Keyera Corp is 1.4 times less risky than Emera. It trades about 0.28 of its potential returns per unit of risk. Emera Inc is currently generating about 0.09 per unit of risk. If you would invest  3,953  in Keyera Corp on September 3, 2024 and sell it today you would earn a total of  664.00  from holding Keyera Corp or generate 16.8% return on investment over 90 days.

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

Keyera Corp  vs.  Emera Inc

Keyera Corp

Risk-Adjusted Performance

22 of 100

Solid

Compared to the overall equity markets, risk-adjusted returns on investments in Keyera Corp are ranked lower than 22 (%) of all global equities and portfolios over the last 90 days. In spite of very unfluctuating basic indicators, Keyera Corp displayed solid returns over the last few months and may actually be approaching a breakup point.

Emera Inc

Risk-Adjusted Performance

6 of 100

Modest

Compared to the overall equity markets, risk-adjusted returns on investments in Emera Inc are ranked lower than 6 (%) of all global equities and portfolios over the last 90 days. In spite of very unfluctuating basic indicators, Emera may actually be approaching a critical reversion point that can send shares even higher in January 2025.

Pair Trading with Keyera Corp and Emera

The main advantage of trading using opposite Keyera Corp and Emera positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Keyera 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 Keyera Corp 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 AI Portfolio Architect module to use AI to generate optimal portfolios and find profitable investment opportunities.