Correlation Between EMERSON ELECTRIC and Air Transport
Can any of the company-specific risk be diversified away by investing in both EMERSON ELECTRIC and Air Transport 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 Air Transport into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between EMERSON ELECTRIC and Air Transport Services, you can compare the effects of market volatilities on EMERSON ELECTRIC and Air Transport 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 Air Transport. Check out your portfolio center. Please also check ongoing floating volatility patterns of EMERSON ELECTRIC and Air Transport.
Diversification Opportunities for EMERSON ELECTRIC and Air Transport
0.87 | Correlation Coefficient |
Very poor diversification
The 3 months correlation between EMERSON and Air is 0.87. Overlapping area represents the amount of risk that can be diversified away by holding EMERSON ELECTRIC and Air Transport Services in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Air Transport Services 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 are associated (or correlated) with Air Transport. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Air Transport Services has no effect on the direction of EMERSON ELECTRIC i.e., EMERSON ELECTRIC and Air Transport go up and down completely randomly.
Pair Corralation between EMERSON ELECTRIC and Air Transport
Assuming the 90 days trading horizon EMERSON ELECTRIC is expected to generate 1.93 times less return on investment than Air Transport. But when comparing it to its historical volatility, EMERSON ELECTRIC is 1.76 times less risky than Air Transport. It trades about 0.12 of its potential returns per unit of risk. Air Transport Services is currently generating about 0.13 of returns per unit of risk over similar time horizon. If you would invest 1,330 in Air Transport Services on November 3, 2024 and sell it today you would earn a total of 790.00 from holding Air Transport Services or generate 59.4% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Strong |
| Accuracy | 100.0% |
| Values | Daily Returns |
EMERSON ELECTRIC vs. Air Transport Services
Performance |
| Timeline |
| EMERSON ELECTRIC |
| Air Transport Services |
EMERSON ELECTRIC and Air Transport Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with EMERSON ELECTRIC and Air Transport
The main advantage of trading using opposite EMERSON ELECTRIC and Air Transport positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if EMERSON ELECTRIC position performs unexpectedly, Air Transport 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 Air Transport will offset losses from the drop in Air Transport's long position.| EMERSON ELECTRIC vs. BOS BETTER ONLINE | EMERSON ELECTRIC vs. ZhongAn Online P | EMERSON ELECTRIC vs. New Residential Investment | EMERSON ELECTRIC vs. SEI INVESTMENTS |
| Air Transport vs. BOS BETTER ONLINE | Air Transport vs. Synovus Financial Corp | Air Transport vs. SALESFORCE INC CDR | Air Transport vs. GungHo Online Entertainment |
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 Positions Ratings module to determine portfolio positions ratings based on digital equity recommendations. Macroaxis instant position ratings are based on combination of fundamental analysis and risk-adjusted market performance.
Other Complementary Tools
| Portfolio Volatility Check portfolio volatility and analyze historical return density to properly model market risk | |
| Portfolio File Import Quickly import all of your third-party portfolios from your local drive in csv format | |
| Equity Valuation Check real value of public entities based on technical and fundamental data | |
| Crypto Correlations Use cryptocurrency correlation module to diversify your cryptocurrency portfolio across multiple coins | |
| Cryptocurrency Center Build and monitor diversified portfolio of extremely risky digital assets and cryptocurrency |