Correlation Between Emera Incorporated and AECOM TECHNOLOGY

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

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

Diversification Opportunities for Emera Incorporated and AECOM TECHNOLOGY

-0.38

Correlation Coefficient

Emera Incorporated  AECOM TECHNOLOGY

Very good diversification

The 3 months correlation between Emera and AECOM is -0.38. Overlapping area represents the amount of risk that can be diversified away by holding Emera Incorporated and AECOM TECHNOLOGY in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on AECOM TECHNOLOGY and Emera Incorporated 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 Emera Incorporated are associated (or correlated) with AECOM TECHNOLOGY. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of AECOM TECHNOLOGY has no effect on the direction of Emera Incorporated i.e., Emera Incorporated and AECOM TECHNOLOGY go up and down completely randomly.

Pair Corralation between Emera Incorporated and AECOM TECHNOLOGY

Assuming the 90 days horizon Emera Incorporated is expected to generate 0.81 times more return on investment than AECOM TECHNOLOGY. However, Emera Incorporated is 1.23 times less risky than AECOM TECHNOLOGY. It trades about 0.07 of its potential returns per unit of risk. AECOM TECHNOLOGY is currently generating about 0.01 per unit of risk. If you would invest  3,247  in Emera Incorporated on February 18, 2024 and sell it today you would earn a total of  131.00  from holding Emera Incorporated or generate 4.03% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Against
Strength	Insignificant
Accuracy	98.41%
Values	Daily Returns

Emera Incorporated  vs.  AECOM TECHNOLOGY

Emera Incorporated

Risk-Adjusted Performance

5 of 100

Modest

Compared to the overall equity markets, risk-adjusted returns on investments in Emera Incorporated are ranked lower than 5 (%) of all global equities and portfolios over the last 90 days. Despite nearly stable basic indicators, Emera Incorporated is not utilizing all of its potentials. The current stock price disturbance, may contribute to mid-run losses for the stockholders.

AECOM TECHNOLOGY

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days AECOM TECHNOLOGY has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of rather sound basic indicators, AECOM TECHNOLOGY is not utilizing all of its potentials. The current stock price tumult, may contribute to shorter-term losses for the shareholders.

Pair Trading with Emera Incorporated and AECOM TECHNOLOGY

The main advantage of trading using opposite Emera Incorporated and AECOM TECHNOLOGY positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Emera Incorporated position performs unexpectedly, AECOM TECHNOLOGY 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 AECOM TECHNOLOGY will offset losses from the drop in AECOM TECHNOLOGY's long position.

The idea behind Emera Incorporated and AECOM TECHNOLOGY 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 Sync Your Broker module to sync your existing holdings, watchlists, positions or portfolios from thousands of online brokerage services, banks, investment account aggregators and robo-advisors..