Correlation Between Emera Incorporated and American States
Can any of the company-specific risk be diversified away by investing in both Emera Incorporated and American States 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 American States into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Emera Incorporated and American States Water, you can compare the effects of market volatilities on Emera Incorporated and American States 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 American States. Check out your portfolio center. Please also check ongoing floating volatility patterns of Emera Incorporated and American States.
Diversification Opportunities for Emera Incorporated and American States
0.35 | Correlation Coefficient |
Weak diversification
The 3 months correlation between Emera and American is 0.35. Overlapping area represents the amount of risk that can be diversified away by holding Emera Incorporated and American States Water in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on American States Water 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 American States. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of American States Water has no effect on the direction of Emera Incorporated i.e., Emera Incorporated and American States go up and down completely randomly.
Pair Corralation between Emera Incorporated and American States
Considering the 90-day investment horizon Emera Incorporated is expected to generate 0.68 times more return on investment than American States. However, Emera Incorporated is 1.46 times less risky than American States. It trades about 0.1 of its potential returns per unit of risk. American States Water is currently generating about -0.02 per unit of risk. If you would invest 4,459 in Emera Incorporated on October 5, 2025 and sell it today you would earn a total of 464.00 from holding Emera Incorporated or generate 10.41% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Very Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
Emera Incorporated vs. American States Water
Performance |
| Timeline |
| Emera Incorporated |
| American States Water |
Emera Incorporated and American States Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Emera Incorporated and American States
The main advantage of trading using opposite Emera Incorporated and American States positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Emera Incorporated position performs unexpectedly, American States 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 American States will offset losses from the drop in American States' long position.| Emera Incorporated vs. Alliant Energy Corp | Emera Incorporated vs. Evergy | Emera Incorporated vs. Sempra Energy | Emera Incorporated vs. Pinnacle West Capital |
| American States vs. California Water Service | American States vs. Renew Energy Global | American States vs. Chesapeake Utilities | American States vs. Central Puerto SA |
Check out your portfolio center.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 Alpha Finder module to use alpha and beta coefficients to find investment opportunities after accounting for the risk.
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