Correlation Between H FARM and EMERSON ELECTRIC
Can any of the company-specific risk be diversified away by investing in both H FARM 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 H FARM and EMERSON ELECTRIC into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between H FARM SPA and EMERSON ELECTRIC, you can compare the effects of market volatilities on H FARM 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 H FARM with a short position of EMERSON ELECTRIC. Check out your portfolio center. Please also check ongoing floating volatility patterns of H FARM and EMERSON ELECTRIC.
Diversification Opportunities for H FARM and EMERSON ELECTRIC
-0.84 | Correlation Coefficient |
Pay attention - limited upside
The 3 months correlation between 5JQ and EMERSON is -0.84. Overlapping area represents the amount of risk that can be diversified away by holding H FARM SPA and EMERSON ELECTRIC in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on EMERSON ELECTRIC and H FARM 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 H FARM SPA 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 H FARM i.e., H FARM and EMERSON ELECTRIC go up and down completely randomly.
Pair Corralation between H FARM and EMERSON ELECTRIC
Assuming the 90 days horizon H FARM is expected to generate 2.54 times less return on investment than EMERSON ELECTRIC. In addition to that, H FARM is 3.28 times more volatile than EMERSON ELECTRIC. It trades about 0.01 of its total potential returns per unit of risk. EMERSON ELECTRIC is currently generating about 0.11 per unit of volatility. If you would invest 7,964 in EMERSON ELECTRIC on September 14, 2024 and sell it today you would earn a total of 4,494 from holding EMERSON ELECTRIC or generate 56.43% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Significant |
| Accuracy | 99.64% |
| Values | Daily Returns |
H FARM SPA vs. EMERSON ELECTRIC
Performance |
| Timeline |
| H FARM SPA |
| EMERSON ELECTRIC |
H FARM and EMERSON ELECTRIC Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with H FARM and EMERSON ELECTRIC
The main advantage of trading using opposite H FARM and EMERSON ELECTRIC positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if H FARM 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.| H FARM vs. Ameriprise Financial | H FARM vs. Ares Management Corp | H FARM vs. Superior Plus Corp | H FARM vs. SIVERS SEMICONDUCTORS AB |
| EMERSON ELECTRIC vs. Chesapeake Utilities | EMERSON ELECTRIC vs. MSAD INSURANCE | EMERSON ELECTRIC vs. Goosehead Insurance | EMERSON ELECTRIC vs. Insurance Australia Group |
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 Odds Of Bankruptcy module to get analysis of equity chance of financial distress in the next 2 years.
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