Correlation Between Titan America and EMERA

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

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

Diversification Opportunities for Titan America and EMERA

0.38

Correlation Coefficient

Titan America  EMERA

Weak diversification

The 3 months correlation between Titan and EMERA is 0.38. Overlapping area represents the amount of risk that can be diversified away by holding Titan America SA 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 Titan America 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 Titan America SA 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 Titan America i.e., Titan America and EMERA go up and down completely randomly.

Pair Corralation between Titan America and EMERA

Given the investment horizon of 90 days Titan America SA is expected to under-perform the EMERA. In addition to that, Titan America is 2.23 times more volatile than EMERA FIN LP. It trades about -0.27 of its total potential returns per unit of risk. EMERA FIN LP is currently generating about -0.13 per unit of volatility. If you would invest  8,340  in EMERA FIN LP on December 22, 2024 and sell it today you would lose (673.00) from holding EMERA FIN LP or give up 8.07% of portfolio value over 90 days.

Time Period	3 Months [change]
Direction	Moves Together
Strength	Very Weak
Accuracy	53.45%
Values	Daily Returns

Titan America SA  vs.  EMERA FIN LP

Titan America SA

Risk-Adjusted Performance

Very Weak

Over the last 90 days Titan America SA 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 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 FIN LP

Risk-Adjusted Performance

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 Titan America and EMERA

The main advantage of trading using opposite Titan America and EMERA positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Titan America 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 Titan America SA 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 FinTech Suite module to use AI to screen and filter profitable investment opportunities.