Correlation Between PLAYMATES TOYS and EMERSON ELECTRIC
Can any of the company-specific risk be diversified away by investing in both PLAYMATES TOYS and EMERSON ELECTRIC 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 PLAYMATES TOYS and EMERSON ELECTRIC into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between PLAYMATES TOYS and EMERSON ELECTRIC, you can compare the effects of market volatilities on PLAYMATES TOYS and EMERSON ELECTRIC 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 PLAYMATES TOYS with a short position of EMERSON ELECTRIC. Check out your portfolio center. Please also check ongoing floating volatility patterns of PLAYMATES TOYS and EMERSON ELECTRIC.
Diversification Opportunities for PLAYMATES TOYS and EMERSON ELECTRIC
-0.41 | Correlation Coefficient |
Very good diversification
The 3 months correlation between PLAYMATES and EMERSON is -0.41. Overlapping area represents the amount of risk that can be diversified away by holding PLAYMATES TOYS and EMERSON ELECTRIC in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on EMERSON ELECTRIC and PLAYMATES TOYS 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 PLAYMATES TOYS are associated (or correlated) with EMERSON ELECTRIC. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of EMERSON ELECTRIC has no effect on the direction of PLAYMATES TOYS i.e., PLAYMATES TOYS and EMERSON ELECTRIC go up and down completely randomly.
Pair Corralation between PLAYMATES TOYS and EMERSON ELECTRIC
Assuming the 90 days trading horizon PLAYMATES TOYS is expected to under-perform the EMERSON ELECTRIC. In addition to that, PLAYMATES TOYS is 5.83 times more volatile than EMERSON ELECTRIC. It trades about -0.05 of its total potential returns per unit of risk. EMERSON ELECTRIC is currently generating about 0.2 per unit of volatility. If you would invest 12,022 in EMERSON ELECTRIC on October 25, 2024 and sell it today you would earn a total of 468.00 from holding EMERSON ELECTRIC or generate 3.89% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Very Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
PLAYMATES TOYS vs. EMERSON ELECTRIC
Performance |
| Timeline |
| PLAYMATES TOYS |
| EMERSON ELECTRIC |
PLAYMATES TOYS and EMERSON ELECTRIC Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with PLAYMATES TOYS and EMERSON ELECTRIC
The main advantage of trading using opposite PLAYMATES TOYS and EMERSON ELECTRIC positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if PLAYMATES TOYS position performs unexpectedly, EMERSON ELECTRIC 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 EMERSON ELECTRIC will offset losses from the drop in EMERSON ELECTRIC's long position.| PLAYMATES TOYS vs. Iridium Communications | PLAYMATES TOYS vs. Spirent Communications plc | PLAYMATES TOYS vs. Cairo Communication SpA | PLAYMATES TOYS vs. CITIC Telecom International |
| EMERSON ELECTRIC vs. SEKISUI CHEMICAL | EMERSON ELECTRIC vs. BORR DRILLING NEW | EMERSON ELECTRIC vs. KINGBOARD CHEMICAL | EMERSON ELECTRIC vs. Columbia Sportswear |
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 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..
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