Correlation Between Emerson Electric and Greenland Acquisition
Can any of the company-specific risk be diversified away by investing in both Emerson Electric and Greenland Acquisition 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 Greenland Acquisition into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Emerson Electric and Greenland Acquisition Corp, you can compare the effects of market volatilities on Emerson Electric and Greenland Acquisition 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 Greenland Acquisition. Check out your portfolio center. Please also check ongoing floating volatility patterns of Emerson Electric and Greenland Acquisition.
Diversification Opportunities for Emerson Electric and Greenland Acquisition
-0.52 | Correlation Coefficient |
Excellent diversification
The 3 months correlation between Emerson and Greenland is -0.52. Overlapping area represents the amount of risk that can be diversified away by holding Emerson Electric and Greenland Acquisition Corp in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Greenland Acquisition 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 Greenland Acquisition. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Greenland Acquisition has no effect on the direction of Emerson Electric i.e., Emerson Electric and Greenland Acquisition go up and down completely randomly.
Pair Corralation between Emerson Electric and Greenland Acquisition
Considering the 90-day investment horizon Emerson Electric is expected to generate 0.38 times more return on investment than Greenland Acquisition. However, Emerson Electric is 2.65 times less risky than Greenland Acquisition. It trades about 0.24 of its potential returns per unit of risk. Greenland Acquisition Corp is currently generating about -0.05 per unit of risk. If you would invest 10,106 in Emerson Electric on September 12, 2024 and sell it today you would earn a total of 2,983 from holding Emerson Electric or generate 29.52% 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. Greenland Acquisition Corp
Performance |
| Timeline |
| Emerson Electric |
| Greenland Acquisition |
Emerson Electric and Greenland Acquisition Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Emerson Electric and Greenland Acquisition
The main advantage of trading using opposite Emerson Electric and Greenland Acquisition positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Emerson Electric position performs unexpectedly, Greenland Acquisition 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 Greenland Acquisition will offset losses from the drop in Greenland Acquisition's 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 Price Exposure Probability module to analyze equity upside and downside potential for a given time horizon across multiple markets.
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