Correlation Between Emerson Electric and Crawford United
Can any of the company-specific risk be diversified away by investing in both Emerson Electric and Crawford United 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 Crawford United into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Emerson Electric and Crawford United, you can compare the effects of market volatilities on Emerson Electric and Crawford United 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 Crawford United. Check out your portfolio center. Please also check ongoing floating volatility patterns of Emerson Electric and Crawford United.
Diversification Opportunities for Emerson Electric and Crawford United
0.66 | Correlation Coefficient |
Poor diversification
The 3 months correlation between Emerson and Crawford is 0.66. Overlapping area represents the amount of risk that can be diversified away by holding Emerson Electric and Crawford United in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Crawford United 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 Crawford United. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Crawford United has no effect on the direction of Emerson Electric i.e., Emerson Electric and Crawford United go up and down completely randomly.
Pair Corralation between Emerson Electric and Crawford United
Considering the 90-day investment horizon Emerson Electric is expected to generate 3.89 times less return on investment than Crawford United. But when comparing it to its historical volatility, Emerson Electric is 1.97 times less risky than Crawford United. It trades about 0.06 of its potential returns per unit of risk. Crawford United is currently generating about 0.11 of returns per unit of risk over similar time horizon. If you would invest 1,650 in Crawford United on August 29, 2024 and sell it today you would earn a total of 972.00 from holding Crawford United or generate 58.91% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Significant |
| Accuracy | 31.25% |
| Values | Daily Returns |
Emerson Electric vs. Crawford United
Performance |
| Timeline |
| Emerson Electric |
| Crawford United |
Risk-Adjusted Performance
0 of 100
Weak | Strong |
Very Weak
Emerson Electric and Crawford United Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Emerson Electric and Crawford United
The main advantage of trading using opposite Emerson Electric and Crawford United positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Emerson Electric position performs unexpectedly, Crawford United 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 Crawford United will offset losses from the drop in Crawford United's long position.| Emerson Electric vs. Dover | Emerson Electric vs. Parker Hannifin | Emerson Electric vs. Pentair PLC | Emerson Electric vs. Eaton PLC |
| Crawford United vs. New Ulm Telecom | Crawford United vs. Ieh Corp | Crawford United vs. FitLife Brands, Common | Crawford United vs. Butler National Corp |
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 Stock Tickers module to use high-impact, comprehensive, and customizable stock tickers that can be easily integrated to any websites.
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