Correlation Between Emerson Electric and Mechel OAO
Can any of the company-specific risk be diversified away by investing in both Emerson Electric and Mechel OAO 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 Mechel OAO into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Emerson Electric and Mechel OAO, you can compare the effects of market volatilities on Emerson Electric and Mechel OAO 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 Mechel OAO. Check out your portfolio center. Please also check ongoing floating volatility patterns of Emerson Electric and Mechel OAO.
Diversification Opportunities for Emerson Electric and Mechel OAO
0.0 | Correlation Coefficient |
Pay attention - limited upside
The 3 months correlation between Emerson and Mechel is 0.0. Overlapping area represents the amount of risk that can be diversified away by holding Emerson Electric and Mechel OAO in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Mechel OAO 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 Mechel OAO. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Mechel OAO has no effect on the direction of Emerson Electric i.e., Emerson Electric and Mechel OAO go up and down completely randomly.
Pair Corralation between Emerson Electric and Mechel OAO
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 | Flat |
| Strength | Insignificant |
| Accuracy | 0.0% |
| Values | Daily Returns |
Emerson Electric vs. Mechel OAO
Performance |
| Timeline |
| Emerson Electric |
| Mechel OAO |
Risk-Adjusted Performance
0 of 100
Weak | Strong |
Very Weak
Emerson Electric and Mechel OAO Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Emerson Electric and Mechel OAO
The main advantage of trading using opposite Emerson Electric and Mechel OAO positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Emerson Electric position performs unexpectedly, Mechel OAO 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 Mechel OAO will offset losses from the drop in Mechel OAO'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 Money Managers module to screen money managers from public funds and ETFs managed around the world.
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