Correlation Between Emerson Electric and Coca Cola
Can any of the company-specific risk be diversified away by investing in both Emerson Electric and Coca Cola 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 Coca Cola into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Emerson Electric and The Coca Cola, you can compare the effects of market volatilities on Emerson Electric and Coca Cola 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 Coca Cola. Check out your portfolio center. Please also check ongoing floating volatility patterns of Emerson Electric and Coca Cola.
Diversification Opportunities for Emerson Electric and Coca Cola
-0.4 | Correlation Coefficient |
Very good diversification
The 3 months correlation between Emerson and Coca is -0.4. Overlapping area represents the amount of risk that can be diversified away by holding Emerson Electric and The Coca Cola in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Coca Cola 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 Coca Cola. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Coca Cola has no effect on the direction of Emerson Electric i.e., Emerson Electric and Coca Cola go up and down completely randomly.
Pair Corralation between Emerson Electric and Coca Cola
Considering the 90-day investment horizon Emerson Electric is expected to generate 1.07 times more return on investment than Coca Cola. However, Emerson Electric is 1.07 times more volatile than The Coca Cola. It trades about 0.23 of its potential returns per unit of risk. The Coca Cola is currently generating about 0.11 per unit of risk. If you would invest 12,218 in Emerson Electric on November 3, 2024 and sell it today you would earn a total of 777.00 from holding Emerson Electric or generate 6.36% 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. The Coca Cola
Performance |
| Timeline |
| Emerson Electric |
| Coca Cola |
Emerson Electric and Coca Cola Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Emerson Electric and Coca Cola
The main advantage of trading using opposite Emerson Electric and Coca Cola positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Emerson Electric position performs unexpectedly, Coca Cola 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 Coca Cola will offset losses from the drop in Coca Cola's long position.| Emerson Electric vs. Dover | Emerson Electric vs. Parker Hannifin | Emerson Electric vs. Pentair PLC | Emerson Electric vs. Eaton PLC |
| Coca Cola vs. Monster Beverage Corp | Coca Cola vs. Celsius Holdings | Coca Cola vs. Coca Cola Consolidated | Coca Cola vs. Keurig Dr Pepper |
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 Money Managers module to screen money managers from public funds and ETFs managed around the world.
Other Complementary Tools
| AI Portfolio Architect Use AI to generate optimal portfolios and find profitable investment opportunities | |
| Portfolio Backtesting Avoid under-diversification and over-optimization by backtesting your portfolios | |
| Equity Analysis Research over 250,000 global equities including funds, stocks and ETFs to find investment opportunities | |
| Fundamental Analysis View fundamental data based on most recent published financial statements | |
| CEOs Directory Screen CEOs from public companies around the world |