Correlation Between Emerson Electric and ITM Power
Can any of the company-specific risk be diversified away by investing in both Emerson Electric and ITM Power 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 ITM Power into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Emerson Electric and ITM Power Plc, you can compare the effects of market volatilities on Emerson Electric and ITM Power 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 ITM Power. Check out your portfolio center. Please also check ongoing floating volatility patterns of Emerson Electric and ITM Power.
Diversification Opportunities for Emerson Electric and ITM Power
-0.86 | Correlation Coefficient |
Pay attention - limited upside
The 3 months correlation between Emerson and ITM is -0.86. Overlapping area represents the amount of risk that can be diversified away by holding Emerson Electric and ITM Power Plc in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on ITM Power Plc 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 ITM Power. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of ITM Power Plc has no effect on the direction of Emerson Electric i.e., Emerson Electric and ITM Power go up and down completely randomly.
Pair Corralation between Emerson Electric and ITM Power
Considering the 90-day investment horizon Emerson Electric is expected to generate 0.33 times more return on investment than ITM Power. However, Emerson Electric is 3.06 times less risky than ITM Power. It trades about 0.09 of its potential returns per unit of risk. ITM Power Plc is currently generating about -0.02 per unit of risk. If you would invest 8,158 in Emerson Electric on September 4, 2024 and sell it today you would earn a total of 5,219 from holding Emerson Electric or generate 63.97% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Significant |
| Accuracy | 100.0% |
| Values | Daily Returns |
Emerson Electric vs. ITM Power Plc
Performance |
| Timeline |
| Emerson Electric |
| ITM Power Plc |
Emerson Electric and ITM Power Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Emerson Electric and ITM Power
The main advantage of trading using opposite Emerson Electric and ITM Power positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Emerson Electric position performs unexpectedly, ITM Power 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 ITM Power will offset losses from the drop in ITM Power's long position.| Emerson Electric vs. Dover | Emerson Electric vs. Parker Hannifin | Emerson Electric vs. Pentair PLC | Emerson Electric vs. Eaton PLC |
| ITM Power vs. Dear Cashmere Holding | ITM Power vs. Goff Corp | ITM Power vs. Wialan Technologies | ITM Power vs. Cgrowth Capital |
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 Ceiling Movement module to calculate and plot Price Ceiling Movement for different equity instruments.
Other Complementary Tools
| Equity Analysis Research over 250,000 global equities including funds, stocks and ETFs to find investment opportunities | |
| Premium Stories Follow Macroaxis premium stories from verified contributors across different equity types, categories and coverage scope | |
| Insider Screener Find insiders across different sectors to evaluate their impact on performance | |
| Portfolio Suggestion Get suggestions outside of your existing asset allocation including your own model portfolios | |
| Piotroski F Score Get Piotroski F Score based on the binary analysis strategy of nine different fundamentals |