Correlation Between Thermo Fisher and Emera Incorporated

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

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

Diversification Opportunities for Thermo Fisher and Emera Incorporated

-0.33

Correlation Coefficient

Thermo Fisher  Emera Incorporated

Very good diversification

The 3 months correlation between Thermo and Emera is -0.33. Overlapping area represents the amount of risk that can be diversified away by holding Thermo Fisher Scientific and Emera Incorporated in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Emera Incorporated and Thermo Fisher 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 Thermo Fisher Scientific 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 Thermo Fisher i.e., Thermo Fisher and Emera Incorporated go up and down completely randomly.

Pair Corralation between Thermo Fisher and Emera Incorporated

If you would invest  57,356  in Thermo Fisher Scientific on January 25, 2024 and sell it today you would earn a total of  416.00  from holding Thermo Fisher Scientific or generate 0.73% return on investment over 90 days.

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

Thermo Fisher Scientific  vs.  Emera Incorporated

Thermo Fisher Scientific

Risk-Adjusted Performance

6 of 100

Modest

Compared to the overall equity markets, risk-adjusted returns on investments in Thermo Fisher Scientific are ranked lower than 6 (%) of all global equities and portfolios over the last 90 days. In spite of very weak primary indicators, Thermo Fisher may actually be approaching a critical reversion point that can send shares even higher in May 2024.

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 Thermo Fisher and Emera Incorporated

The main advantage of trading using opposite Thermo Fisher and Emera Incorporated positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Thermo Fisher 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 Thermo Fisher Scientific 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 Share Portfolio module to track or share privately all of your investments from the convenience of any device.