Correlation Between Nova Leap and Emera Pref

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

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

Diversification Opportunities for Nova Leap and Emera Pref

-0.36

Correlation Coefficient

Nova Leap  Emera Pref

Very good diversification

The 3 months correlation between Nova and Emera is -0.36. Overlapping area represents the amount of risk that can be diversified away by holding Nova Leap Health 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 Nova Leap 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 Nova Leap Health 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 Nova Leap i.e., Nova Leap and Emera Pref go up and down completely randomly.

Pair Corralation between Nova Leap and Emera Pref

Assuming the 90 days horizon Nova Leap is expected to generate 3.43 times less return on investment than Emera Pref. In addition to that, Nova Leap is 4.62 times more volatile than Emera Pref A. It trades about 0.02 of its total potential returns per unit of risk. Emera Pref A is currently generating about 0.29 per unit of volatility. If you would invest  1,596  in Emera Pref A on October 26, 2024 and sell it today you would earn a total of  160.00  from holding Emera Pref A or generate 10.03% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Against
Strength	Insignificant
Accuracy	97.62%
Values	Daily Returns

Nova Leap Health  vs.  Emera Pref A

Nova Leap Health

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Nova Leap Health 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 fairly stable which may send shares a bit higher in February 2025. The latest fuss may also be a sign of long-term up-swing for the venture sophisticated investors.

Emera Pref A

Risk-Adjusted Performance

25 of 100

Solid

Compared to the overall equity markets, risk-adjusted returns on investments in Emera Pref A are ranked lower than 25 (%) of all global equities and portfolios over the last 90 days. Despite somewhat unsteady basic indicators, Emera Pref sustained solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with Nova Leap and Emera Pref

The main advantage of trading using opposite Nova Leap and Emera Pref positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Nova Leap 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 Nova Leap Health 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.

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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 Theme Ratings module to determine theme ratings based on digital equity recommendations. Macroaxis theme ratings are based on combination of fundamental analysis and risk-adjusted market performance.