Correlation Between Entergy Louisiana and Emerson Electric
Can any of the company-specific risk be diversified away by investing in both Entergy Louisiana 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 Entergy Louisiana and Emerson Electric into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Entergy Louisiana LLC and Emerson Electric, you can compare the effects of market volatilities on Entergy Louisiana 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 Entergy Louisiana with a short position of Emerson Electric. Check out your portfolio center. Please also check ongoing floating volatility patterns of Entergy Louisiana and Emerson Electric.
Diversification Opportunities for Entergy Louisiana and Emerson Electric
-0.67 | Correlation Coefficient |
Excellent diversification
The 3 months correlation between Entergy and Emerson is -0.67. Overlapping area represents the amount of risk that can be diversified away by holding Entergy Louisiana LLC and Emerson Electric in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Emerson Electric and Entergy Louisiana 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 Entergy Louisiana LLC 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 Entergy Louisiana i.e., Entergy Louisiana and Emerson Electric go up and down completely randomly.
Pair Corralation between Entergy Louisiana and Emerson Electric
Considering the 90-day investment horizon Entergy Louisiana is expected to generate 5.31 times less return on investment than Emerson Electric. But when comparing it to its historical volatility, Entergy Louisiana LLC is 2.42 times less risky than Emerson Electric. It trades about 0.05 of its potential returns per unit of risk. Emerson Electric is currently generating about 0.11 of returns per unit of risk over similar time horizon. If you would invest 8,806 in Emerson Electric on September 4, 2024 and sell it today you would earn a total of 4,534 from holding Emerson Electric or generate 51.49% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
Entergy Louisiana LLC vs. Emerson Electric
Performance |
| Timeline |
| Entergy Louisiana LLC |
| Emerson Electric |
Entergy Louisiana and Emerson Electric Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Entergy Louisiana and Emerson Electric
The main advantage of trading using opposite Entergy Louisiana and Emerson Electric positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Entergy Louisiana 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.| Entergy Louisiana vs. Origin Materials | Entergy Louisiana vs. CF Industries Holdings | Entergy Louisiana vs. National CineMedia | Entergy Louisiana vs. Organic Sales and |
| Emerson Electric vs. Dover | Emerson Electric vs. Parker Hannifin | Emerson Electric vs. Pentair PLC | Emerson Electric vs. Eaton PLC |
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 Companies Directory module to evaluate performance of over 100,000 Stocks, Funds, and ETFs against different fundamentals.
Other Complementary Tools
| Bond Analysis Evaluate and analyze corporate bonds as a potential investment for your portfolios. | |
| Idea Analyzer Analyze all characteristics, volatility and risk-adjusted return of Macroaxis ideas | |
| Pair Correlation Compare performance and examine fundamental relationship between any two equity instruments | |
| Bollinger Bands Use Bollinger Bands indicator to analyze target price for a given investing horizon | |
| ETFs Find actively traded Exchange Traded Funds (ETF) from around the world |