Correlation Between Lycos Energy and Emera

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

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

Diversification Opportunities for Lycos Energy and Emera

-0.18

Correlation Coefficient

Lycos Energy  Emera

Good diversification

The 3 months correlation between Lycos and Emera is -0.18. Overlapping area represents the amount of risk that can be diversified away by holding Lycos Energy and Emera Inc in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Emera Inc and Lycos Energy 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 Lycos Energy 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 Lycos Energy i.e., Lycos Energy and Emera go up and down completely randomly.

Pair Corralation between Lycos Energy and Emera

Assuming the 90 days horizon Lycos Energy is expected to generate 41.47 times more return on investment than Emera. However, Lycos Energy is 41.47 times more volatile than Emera Inc. It trades about 0.05 of its potential returns per unit of risk. Emera Inc is currently generating about 0.02 per unit of risk. If you would invest  432.00  in Lycos Energy on October 25, 2024 and sell it today you would lose (182.00) from holding Lycos Energy or give up 42.13% of portfolio value over 90 days.

Time Period	3 Months [change]
Direction	Moves Against
Strength	Insignificant
Accuracy	99.8%
Values	Daily Returns

Lycos Energy  vs.  Emera Inc

Lycos Energy

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Lycos Energy has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of latest unfluctuating performance, the Stock's basic indicators remain stable and the latest fuss on Wall Street may also be a sign of long-term gains for the venture sophisticated investors.

Emera Inc

Risk-Adjusted Performance

3 of 100

Insignificant

Compared to the overall equity markets, risk-adjusted returns on investments in Emera Inc are ranked lower than 3 (%) of all global equities and portfolios over the last 90 days. In spite of very healthy basic indicators, Emera is not utilizing all of its potentials. The recent stock price disarray, may contribute to short-term losses for the investors.

Pair Trading with Lycos Energy and Emera

The main advantage of trading using opposite Lycos Energy and Emera positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Lycos Energy 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 Lycos Energy 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 Competition Analyzer module to analyze and compare many basic indicators for a group of related or unrelated entities.