Correlation Between Emerson Electric and AGL Energy
Can any of the company-specific risk be diversified away by investing in both Emerson Electric and AGL Energy 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 AGL Energy into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Emerson Electric and AGL Energy Limited, you can compare the effects of market volatilities on Emerson Electric and AGL Energy 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 AGL Energy. Check out your portfolio center. Please also check ongoing floating volatility patterns of Emerson Electric and AGL Energy.
Diversification Opportunities for Emerson Electric and AGL Energy
0.87 | Correlation Coefficient |
Very poor diversification
The 3 months correlation between Emerson and AGL is 0.87. Overlapping area represents the amount of risk that can be diversified away by holding Emerson Electric and AGL Energy Limited in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on AGL Energy Limited 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 AGL Energy. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of AGL Energy Limited has no effect on the direction of Emerson Electric i.e., Emerson Electric and AGL Energy go up and down completely randomly.
Pair Corralation between Emerson Electric and AGL Energy
If you would invest 12,963 in Emerson Electric on September 14, 2024 and sell it today you would earn a total of 153.00 from holding Emerson Electric or generate 1.18% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Strong |
| Accuracy | 4.76% |
| Values | Daily Returns |
Emerson Electric vs. AGL Energy Limited
Performance |
| Timeline |
| Emerson Electric |
| AGL Energy Limited |
Risk-Adjusted Performance
0 of 100
Weak | Strong |
Very Weak
Emerson Electric and AGL Energy Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Emerson Electric and AGL Energy
The main advantage of trading using opposite Emerson Electric and AGL Energy positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Emerson Electric position performs unexpectedly, AGL Energy 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 AGL Energy will offset losses from the drop in AGL Energy's long position.| Emerson Electric vs. Dover | Emerson Electric vs. Parker Hannifin | Emerson Electric vs. Pentair PLC | Emerson Electric vs. Eaton PLC |
| AGL Energy vs. Emerson Electric | AGL Energy vs. ReTo Eco Solutions | AGL Energy vs. Valneva SE ADR | AGL Energy vs. BioNTech SE |
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 Sync Your Broker module to sync your existing holdings, watchlists, positions or portfolios from thousands of online brokerage services, banks, investment account aggregators and robo-advisors..
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