Correlation Between Emerson Electric and New Oriental
Can any of the company-specific risk be diversified away by investing in both Emerson Electric and New Oriental 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 New Oriental 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 New Oriental Education, you can compare the effects of market volatilities on Emerson Electric and New Oriental 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 New Oriental. Check out your portfolio center. Please also check ongoing floating volatility patterns of Emerson Electric and New Oriental.
Diversification Opportunities for Emerson Electric and New Oriental
-0.19 | Correlation Coefficient |
Good diversification
The 3 months correlation between Emerson and New is -0.19. Overlapping area represents the amount of risk that can be diversified away by holding Emerson Electric Co and New Oriental Education in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on New Oriental Education 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 New Oriental. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of New Oriental Education has no effect on the direction of Emerson Electric i.e., Emerson Electric and New Oriental go up and down completely randomly.
Pair Corralation between Emerson Electric and New Oriental
Assuming the 90 days trading horizon Emerson Electric Co is expected to generate 0.27 times more return on investment than New Oriental. However, Emerson Electric Co is 3.7 times less risky than New Oriental. It trades about 0.1 of its potential returns per unit of risk. New Oriental Education is currently generating about 0.01 per unit of risk. If you would invest 187,317 in Emerson Electric Co on August 29, 2024 and sell it today you would earn a total of 16,883 from holding Emerson Electric Co or generate 9.01% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Insignificant |
| Accuracy | 100.0% |
| Values | Daily Returns |
Emerson Electric Co vs. New Oriental Education
Performance |
| Timeline |
| Emerson Electric |
| New Oriental Education |
Emerson Electric and New Oriental Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Emerson Electric and New Oriental
The main advantage of trading using opposite Emerson Electric and New Oriental positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Emerson Electric position performs unexpectedly, New Oriental 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 New Oriental will offset losses from the drop in New Oriental's long position.| Emerson Electric vs. New Oriental Education | Emerson Electric vs. McEwen Mining | Emerson Electric vs. Ameriprise Financial | Emerson Electric vs. Lloyds Banking Group |
| New Oriental vs. The Select Sector | New Oriental vs. SPDR Series Trust | New Oriental vs. FibroGen | New Oriental vs. iShares Trust |
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.
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