Correlation Between Emerson Electric and Aquarius Engines
Can any of the company-specific risk be diversified away by investing in both Emerson Electric and Aquarius Engines 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 Aquarius Engines into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Emerson Electric and Aquarius Engines, you can compare the effects of market volatilities on Emerson Electric and Aquarius Engines 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 Aquarius Engines. Check out your portfolio center. Please also check ongoing floating volatility patterns of Emerson Electric and Aquarius Engines.
Diversification Opportunities for Emerson Electric and Aquarius Engines
-0.77 | Correlation Coefficient |
Pay attention - limited upside
The 3 months correlation between Emerson and Aquarius is -0.77. Overlapping area represents the amount of risk that can be diversified away by holding Emerson Electric and Aquarius Engines in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Aquarius Engines 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 Aquarius Engines. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Aquarius Engines has no effect on the direction of Emerson Electric i.e., Emerson Electric and Aquarius Engines go up and down completely randomly.
Pair Corralation between Emerson Electric and Aquarius Engines
Considering the 90-day investment horizon Emerson Electric is expected to generate 0.34 times more return on investment than Aquarius Engines. However, Emerson Electric is 2.9 times less risky than Aquarius Engines. It trades about 0.43 of its potential returns per unit of risk. Aquarius Engines is currently generating about -0.05 per unit of risk. If you would invest 10,822 in Emerson Electric on August 28, 2024 and sell it today you would earn a total of 2,453 from holding Emerson Electric or generate 22.67% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
Emerson Electric vs. Aquarius Engines
Performance |
| Timeline |
| Emerson Electric |
| Aquarius Engines |
Emerson Electric and Aquarius Engines Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Emerson Electric and Aquarius Engines
The main advantage of trading using opposite Emerson Electric and Aquarius Engines positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Emerson Electric position performs unexpectedly, Aquarius Engines 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 Aquarius Engines will offset losses from the drop in Aquarius Engines' long position.| Emerson Electric vs. Dover | Emerson Electric vs. Parker Hannifin | Emerson Electric vs. Pentair PLC | Emerson Electric vs. Eaton PLC |
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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 Financial Widgets module to easily integrated Macroaxis content with over 30 different plug-and-play financial widgets.
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