Correlation Between Emerson Electric and Clean Energy
Can any of the company-specific risk be diversified away by investing in both Emerson Electric and Clean 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 Clean 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 Clean Energy Technologies,, you can compare the effects of market volatilities on Emerson Electric and Clean 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 Clean Energy. Check out your portfolio center. Please also check ongoing floating volatility patterns of Emerson Electric and Clean Energy.
Diversification Opportunities for Emerson Electric and Clean Energy
-0.57 | Correlation Coefficient |
Excellent diversification
The 3 months correlation between Emerson and Clean is -0.57. Overlapping area represents the amount of risk that can be diversified away by holding Emerson Electric and Clean Energy Technologies, in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Clean Energy Technol 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 Clean Energy. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Clean Energy Technol has no effect on the direction of Emerson Electric i.e., Emerson Electric and Clean Energy go up and down completely randomly.
Pair Corralation between Emerson Electric and Clean Energy
Considering the 90-day investment horizon Emerson Electric is expected to generate 0.32 times more return on investment than Clean Energy. However, Emerson Electric is 3.11 times less risky than Clean Energy. It trades about 0.4 of its potential returns per unit of risk. Clean Energy Technologies, is currently generating about 0.0 per unit of risk. If you would invest 10,857 in Emerson Electric on August 31, 2024 and sell it today you would earn a total of 2,402 from holding Emerson Electric or generate 22.12% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Very Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
Emerson Electric vs. Clean Energy Technologies,
Performance |
| Timeline |
| Emerson Electric |
| Clean Energy Technol |
Emerson Electric and Clean Energy Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Emerson Electric and Clean Energy
The main advantage of trading using opposite Emerson Electric and Clean Energy positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Emerson Electric position performs unexpectedly, Clean 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 Clean Energy will offset losses from the drop in Clean Energy's long position.| Emerson Electric vs. Dover | Emerson Electric vs. Parker Hannifin | Emerson Electric vs. Pentair PLC | Emerson Electric vs. Eaton PLC |
| Clean Energy vs. Graco Inc | Clean Energy vs. Franklin Electric Co | Clean Energy vs. Flowserve | Clean Energy vs. Donaldson |
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 Diagnostics module to use generated alerts and portfolio events aggregator to diagnose current holdings.
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