Correlation Between Emerson Electric and Fortrea Holdings
Can any of the company-specific risk be diversified away by investing in both Emerson Electric and Fortrea Holdings 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 Fortrea Holdings into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Emerson Electric and Fortrea Holdings, you can compare the effects of market volatilities on Emerson Electric and Fortrea Holdings 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 Fortrea Holdings. Check out your portfolio center. Please also check ongoing floating volatility patterns of Emerson Electric and Fortrea Holdings.
Diversification Opportunities for Emerson Electric and Fortrea Holdings
0.25 | Correlation Coefficient |
Modest diversification
The 3 months correlation between Emerson and Fortrea is 0.25. Overlapping area represents the amount of risk that can be diversified away by holding Emerson Electric and Fortrea Holdings in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Fortrea Holdings 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 Fortrea Holdings. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Fortrea Holdings has no effect on the direction of Emerson Electric i.e., Emerson Electric and Fortrea Holdings go up and down completely randomly.
Pair Corralation between Emerson Electric and Fortrea Holdings
Considering the 90-day investment horizon Emerson Electric is expected to generate 0.23 times more return on investment than Fortrea Holdings. However, Emerson Electric is 4.4 times less risky than Fortrea Holdings. It trades about 0.12 of its potential returns per unit of risk. Fortrea Holdings is currently generating about -0.07 per unit of risk. If you would invest 12,788 in Emerson Electric on September 13, 2024 and sell it today you would earn a total of 324.00 from holding Emerson Electric or generate 2.53% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Very Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
Emerson Electric vs. Fortrea Holdings
Performance |
| Timeline |
| Emerson Electric |
| Fortrea Holdings |
Emerson Electric and Fortrea Holdings Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Emerson Electric and Fortrea Holdings
The main advantage of trading using opposite Emerson Electric and Fortrea Holdings positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Emerson Electric position performs unexpectedly, Fortrea Holdings 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 Fortrea Holdings will offset losses from the drop in Fortrea Holdings' long position.| Emerson Electric vs. Dover | Emerson Electric vs. Parker Hannifin | Emerson Electric vs. Pentair PLC | Emerson Electric vs. Eaton PLC |
| Fortrea Holdings vs. Saia Inc | Fortrea Holdings vs. Skillful Craftsman Education | Fortrea Holdings vs. Sun Country Airlines | Fortrea Holdings vs. The Gap, |
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 Equity Search module to search for actively traded equities including funds and ETFs from over 30 global markets.
Other Complementary Tools
| Risk-Return Analysis View associations between returns expected from investment and the risk you assume | |
| ETF Categories List of ETF categories grouped based on various criteria, such as the investment strategy or type of investments | |
| Portfolio Anywhere Track or share privately all of your investments from the convenience of any device | |
| Sync Your Broker Sync your existing holdings, watchlists, positions or portfolios from thousands of online brokerage services, banks, investment account aggregators and robo-advisors. | |
| Portfolio Comparator Compare the composition, asset allocations and performance of any two portfolios in your account |