Correlation Between Emerson Electric and Mind Medicine
Can any of the company-specific risk be diversified away by investing in both Emerson Electric and Mind Medicine 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 Mind Medicine into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Emerson Electric and Mind Medicine, you can compare the effects of market volatilities on Emerson Electric and Mind Medicine 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 Mind Medicine. Check out your portfolio center. Please also check ongoing floating volatility patterns of Emerson Electric and Mind Medicine.
Diversification Opportunities for Emerson Electric and Mind Medicine
0.81 | Correlation Coefficient |
Very poor diversification
The 3 months correlation between Emerson and Mind is 0.81. Overlapping area represents the amount of risk that can be diversified away by holding Emerson Electric and Mind Medicine in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Mind Medicine 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 Mind Medicine. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Mind Medicine has no effect on the direction of Emerson Electric i.e., Emerson Electric and Mind Medicine go up and down completely randomly.
Pair Corralation between Emerson Electric and Mind Medicine
Considering the 90-day investment horizon Emerson Electric is expected to generate 4.33 times less return on investment than Mind Medicine. But when comparing it to its historical volatility, Emerson Electric is 3.37 times less risky than Mind Medicine. It trades about 0.05 of its potential returns per unit of risk. Mind Medicine is currently generating about 0.07 of returns per unit of risk over similar time horizon. If you would invest 227.00 in Mind Medicine on September 14, 2024 and sell it today you would earn a total of 475.00 from holding Mind Medicine or generate 209.25% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Strong |
| Accuracy | 100.0% |
| Values | Daily Returns |
Emerson Electric vs. Mind Medicine
Performance |
| Timeline |
| Emerson Electric |
| Mind Medicine |
Emerson Electric and Mind Medicine Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Emerson Electric and Mind Medicine
The main advantage of trading using opposite Emerson Electric and Mind Medicine positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Emerson Electric position performs unexpectedly, Mind Medicine 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 Mind Medicine will offset losses from the drop in Mind Medicine's long position.| Emerson Electric vs. Dover | Emerson Electric vs. Parker Hannifin | Emerson Electric vs. Pentair PLC | Emerson Electric vs. Eaton PLC |
| Mind Medicine vs. Cybin Inc | Mind Medicine vs. GH Research PLC | Mind Medicine vs. Awakn Life Sciences | Mind Medicine vs. ATAI Life Sciences |
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 Portfolio Optimization module to compute new portfolio that will generate highest expected return given your specified tolerance for risk.
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