Correlation Between ConvaTec Group and Emerson Electric
Can any of the company-specific risk be diversified away by investing in both ConvaTec Group 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 ConvaTec Group and Emerson Electric into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between ConvaTec Group Plc and Emerson Electric, you can compare the effects of market volatilities on ConvaTec Group 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 ConvaTec Group with a short position of Emerson Electric. Check out your portfolio center. Please also check ongoing floating volatility patterns of ConvaTec Group and Emerson Electric.
Diversification Opportunities for ConvaTec Group and Emerson Electric
0.48 | Correlation Coefficient |
Very weak diversification
The 3 months correlation between ConvaTec and Emerson is 0.48. Overlapping area represents the amount of risk that can be diversified away by holding ConvaTec Group Plc and Emerson Electric in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Emerson Electric and ConvaTec Group 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 ConvaTec Group Plc 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 ConvaTec Group i.e., ConvaTec Group and Emerson Electric go up and down completely randomly.
Pair Corralation between ConvaTec Group and Emerson Electric
Assuming the 90 days horizon ConvaTec Group is expected to generate 6.15 times less return on investment than Emerson Electric. In addition to that, ConvaTec Group is 1.77 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 0.1 per unit of volatility. If you would invest 10,542 in Emerson Electric on November 3, 2024 and sell it today you would earn a total of 2,453 from holding Emerson Electric or generate 23.27% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Weak |
| Accuracy | 97.66% |
| Values | Daily Returns |
ConvaTec Group Plc vs. Emerson Electric
Performance |
| Timeline |
| ConvaTec Group Plc |
| Emerson Electric |
ConvaTec Group and Emerson Electric Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with ConvaTec Group and Emerson Electric
The main advantage of trading using opposite ConvaTec Group and Emerson Electric positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if ConvaTec Group 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.| ConvaTec Group vs. Inflection Point Acquisition | ConvaTec Group vs. Electrovaya Common Shares | ConvaTec Group vs. Emerson Radio | ConvaTec Group vs. Aldel Financial II |
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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 FinTech Suite module to use AI to screen and filter profitable investment opportunities.
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