Correlation Between TransAlta Corp and Emera

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

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

Diversification Opportunities for TransAlta Corp and Emera

-0.89

Correlation Coefficient

TransAlta Corp  Emera

Pay attention - limited upside

The 3 months correlation between TransAlta and Emera is -0.89. Overlapping area represents the amount of risk that can be diversified away by holding TransAlta Corp and Emera Inc in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Emera Inc and TransAlta 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 TransAlta 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 TransAlta Corp i.e., TransAlta Corp and Emera go up and down completely randomly.

Pair Corralation between TransAlta Corp and Emera

Assuming the 90 days horizon TransAlta Corp is expected to under-perform the Emera. In addition to that, TransAlta Corp is 3.73 times more volatile than Emera Inc. It trades about -0.16 of its total potential returns per unit of risk. Emera Inc is currently generating about 0.2 per unit of volatility. If you would invest  5,336  in Emera Inc on December 30, 2024 and sell it today you would earn a total of  696.00  from holding Emera Inc or generate 13.04% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Against
Strength	Significant
Accuracy	100.0%
Values	Daily Returns

TransAlta Corp  vs.  Emera Inc

TransAlta Corp

Risk-Adjusted Performance

Very Weak

Over the last 90 days TransAlta Corp 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 basic indicators remain very healthy which may send shares a bit higher in April 2025. The recent disarray may also be a sign of long period up-swing for the firm investors.

Emera Inc

Risk-Adjusted Performance

Solid

Compared to the overall equity markets, risk-adjusted returns on investments in Emera Inc are ranked lower than 16 (%) 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 April 2025.

Pair Trading with TransAlta Corp and Emera

The main advantage of trading using opposite TransAlta Corp and Emera positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if TransAlta 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 TransAlta 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 Idea Analyzer module to analyze all characteristics, volatility and risk-adjusted return of Macroaxis ideas.