Correlation Between Emerson Electric and BRIT AMER
Can any of the company-specific risk be diversified away by investing in both Emerson Electric and BRIT AMER 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 Emerson Electric and BRIT AMER into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Emerson Electric Co and BRIT AMER TOBACCO, you can compare the effects of market volatilities on Emerson Electric and BRIT AMER 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 Emerson Electric with a short position of BRIT AMER. Check out your portfolio center. Please also check ongoing floating volatility patterns of Emerson Electric and BRIT AMER.
Diversification Opportunities for Emerson Electric and BRIT AMER
0.42 | Correlation Coefficient |
Very weak diversification
The 3 months correlation between Emerson and BRIT is 0.42. Overlapping area represents the amount of risk that can be diversified away by holding Emerson Electric Co and BRIT AMER TOBACCO in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on BRIT AMER TOBACCO and Emerson Electric 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 Emerson Electric Co are associated (or correlated) with BRIT AMER. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of BRIT AMER TOBACCO has no effect on the direction of Emerson Electric i.e., Emerson Electric and BRIT AMER go up and down completely randomly.
Pair Corralation between Emerson Electric and BRIT AMER
Assuming the 90 days horizon Emerson Electric Co is expected to generate 1.64 times more return on investment than BRIT AMER. However, Emerson Electric is 1.64 times more volatile than BRIT AMER TOBACCO. It trades about 0.11 of its potential returns per unit of risk. BRIT AMER TOBACCO is currently generating about 0.18 per unit of risk. If you would invest 9,712 in Emerson Electric Co on September 3, 2024 and sell it today you would earn a total of 2,864 from holding Emerson Electric Co or generate 29.49% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
Emerson Electric Co vs. BRIT AMER TOBACCO
Performance |
| Timeline |
| Emerson Electric |
| BRIT AMER TOBACCO |
Emerson Electric and BRIT AMER Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Emerson Electric and BRIT AMER
The main advantage of trading using opposite Emerson Electric and BRIT AMER positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Emerson Electric position performs unexpectedly, BRIT AMER 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 BRIT AMER will offset losses from the drop in BRIT AMER's long position.| Emerson Electric vs. BRIT AMER TOBACCO | Emerson Electric vs. Transport International Holdings | Emerson Electric vs. PARKEN Sport Entertainment | Emerson Electric vs. USWE SPORTS AB |
| BRIT AMER vs. FEMALE HEALTH | BRIT AMER vs. PARKEN Sport Entertainment | BRIT AMER vs. Amkor Technology | BRIT AMER vs. CVS Health |
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 Commodity Directory module to find actively traded commodities issued by global exchanges.
Other Complementary Tools
| Portfolio Optimization Compute new portfolio that will generate highest expected return given your specified tolerance for risk | |
| Commodity Channel Use Commodity Channel Index to analyze current equity momentum | |
| Options Analysis Analyze and evaluate options and option chains as a potential hedge for your portfolios | |
| Idea Analyzer Analyze all characteristics, volatility and risk-adjusted return of Macroaxis ideas | |
| Volatility Analysis Get historical volatility and risk analysis based on latest market data |