Correlation Between Emerson Electric and SPDR Series
Can any of the company-specific risk be diversified away by investing in both Emerson Electric and SPDR Series 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 SPDR Series 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 SPDR Series Trust, you can compare the effects of market volatilities on Emerson Electric and SPDR Series 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 SPDR Series. Check out your portfolio center. Please also check ongoing floating volatility patterns of Emerson Electric and SPDR Series.
Diversification Opportunities for Emerson Electric and SPDR Series
-0.16 | Correlation Coefficient |
Good diversification
The 3 months correlation between Emerson and SPDR is -0.16. Overlapping area represents the amount of risk that can be diversified away by holding Emerson Electric Co and SPDR Series Trust in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on SPDR Series Trust 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 SPDR Series. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of SPDR Series Trust has no effect on the direction of Emerson Electric i.e., Emerson Electric and SPDR Series go up and down completely randomly.
Pair Corralation between Emerson Electric and SPDR Series
Assuming the 90 days trading horizon Emerson Electric Co is expected to generate 2.41 times more return on investment than SPDR Series. However, Emerson Electric is 2.41 times more volatile than SPDR Series Trust. It trades about 0.09 of its potential returns per unit of risk. SPDR Series Trust is currently generating about -0.15 per unit of risk. If you would invest 203,374 in Emerson Electric Co on December 11, 2024 and sell it today you would earn a total of 29,962 from holding Emerson Electric Co or generate 14.73% 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. SPDR Series Trust
Performance |
| Timeline |
| Emerson Electric |
| SPDR Series Trust |
Emerson Electric and SPDR Series Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Emerson Electric and SPDR Series
The main advantage of trading using opposite Emerson Electric and SPDR Series positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Emerson Electric position performs unexpectedly, SPDR Series 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 SPDR Series will offset losses from the drop in SPDR Series' long position.| Emerson Electric vs. United States Steel | Emerson Electric vs. Air Transport Services | Emerson Electric vs. GMxico Transportes SAB | Emerson Electric vs. Ross Stores |
| SPDR Series vs. SPDR Dow Jones | SPDR Series vs. SPDR Gold Trust | SPDR Series vs. SPDR SP 500 | SPDR Series vs. SPDR SP Regional |
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 Portfolio File Import module to quickly import all of your third-party portfolios from your local drive in csv format.
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