Correlation Between ChargePoint Holdings and Emera Incorporated

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

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

Diversification Opportunities for ChargePoint Holdings and Emera Incorporated

0.01

Correlation Coefficient

ChargePoint Holdings  Emera Incorporated

Significant diversification

The 3 months correlation between ChargePoint and Emera is 0.01. Overlapping area represents the amount of risk that can be diversified away by holding ChargePoint Holdings and Emera Incorporated in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Emera Incorporated and ChargePoint Holdings 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 ChargePoint Holdings are associated (or correlated) with Emera Incorporated. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Emera Incorporated has no effect on the direction of ChargePoint Holdings i.e., ChargePoint Holdings and Emera Incorporated go up and down completely randomly.

Pair Corralation between ChargePoint Holdings and Emera Incorporated

Given the investment horizon of 90 days ChargePoint Holdings is expected to under-perform the Emera Incorporated. In addition to that, ChargePoint Holdings is 2.52 times more volatile than Emera Incorporated. It trades about -0.05 of its total potential returns per unit of risk. Emera Incorporated is currently generating about 0.06 per unit of volatility. If you would invest  1,381  in Emera Incorporated on January 17, 2024 and sell it today you would earn a total of  219.00  from holding Emera Incorporated or generate 15.86% return on investment over 90 days.

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

ChargePoint Holdings  vs.  Emera Incorporated

ChargePoint Holdings

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days ChargePoint Holdings has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of comparatively stable basic indicators, ChargePoint Holdings is not utilizing all of its potentials. The current stock price uproar, may contribute to short-horizon losses for the private investors.

Emera Incorporated

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Emera Incorporated has generated negative risk-adjusted returns adding no value to investors with long positions. Despite nearly stable basic indicators, Emera Incorporated is not utilizing all of its potentials. The recent stock price disturbance, may contribute to mid-run losses for the stockholders.

Pair Trading with ChargePoint Holdings and Emera Incorporated

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

The idea behind ChargePoint Holdings and Emera Incorporated 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.