Correlation Between Superior Plus and Emerson Electric
Can any of the company-specific risk be diversified away by investing in both Superior Plus 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 Superior Plus and Emerson Electric into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Superior Plus Corp and Emerson Electric Co, you can compare the effects of market volatilities on Superior Plus 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 Superior Plus with a short position of Emerson Electric. Check out your portfolio center. Please also check ongoing floating volatility patterns of Superior Plus and Emerson Electric.
Diversification Opportunities for Superior Plus and Emerson Electric
-0.79 | Correlation Coefficient |
Pay attention - limited upside
The 3 months correlation between Superior and Emerson is -0.79. Overlapping area represents the amount of risk that can be diversified away by holding Superior Plus Corp and Emerson Electric Co in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Emerson Electric and Superior Plus 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 Superior Plus Corp 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 Superior Plus i.e., Superior Plus and Emerson Electric go up and down completely randomly.
Pair Corralation between Superior Plus and Emerson Electric
Assuming the 90 days horizon Superior Plus Corp is expected to under-perform the Emerson Electric. In addition to that, Superior Plus is 1.3 times more volatile than Emerson Electric Co. It trades about -0.02 of its total potential returns per unit of risk. Emerson Electric Co is currently generating about 0.05 per unit of volatility. If you would invest 8,707 in Emerson Electric Co on August 25, 2024 and sell it today you would earn a total of 3,461 from holding Emerson Electric Co or generate 39.75% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Weak |
| Accuracy | 99.8% |
| Values | Daily Returns |
Superior Plus Corp vs. Emerson Electric Co
Performance |
| Timeline |
| Superior Plus Corp |
| Emerson Electric |
Superior Plus and Emerson Electric Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Superior Plus and Emerson Electric
The main advantage of trading using opposite Superior Plus and Emerson Electric positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Superior Plus 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.| Superior Plus vs. Fast Retailing Co | Superior Plus vs. Auto Trader Group | Superior Plus vs. Monster Beverage Corp | Superior Plus vs. Suntory Beverage Food |
| Emerson Electric vs. Superior Plus Corp | Emerson Electric vs. NMI Holdings | Emerson Electric vs. Origin Agritech | Emerson Electric vs. SIVERS SEMICONDUCTORS AB |
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 Crypto Correlations module to use cryptocurrency correlation module to diversify your cryptocurrency portfolio across multiple coins.
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