Correlation Between Emerson Electric and Natures Miracle
Can any of the company-specific risk be diversified away by investing in both Emerson Electric and Natures Miracle 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 Natures Miracle into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Emerson Electric and Natures Miracle Holding, you can compare the effects of market volatilities on Emerson Electric and Natures Miracle 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 Natures Miracle. Check out your portfolio center. Please also check ongoing floating volatility patterns of Emerson Electric and Natures Miracle.
Diversification Opportunities for Emerson Electric and Natures Miracle
-0.57 | Correlation Coefficient |
Excellent diversification
The 3 months correlation between Emerson and Natures is -0.57. Overlapping area represents the amount of risk that can be diversified away by holding Emerson Electric and Natures Miracle Holding in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Natures Miracle Holding 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 Natures Miracle. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Natures Miracle Holding has no effect on the direction of Emerson Electric i.e., Emerson Electric and Natures Miracle go up and down completely randomly.
Pair Corralation between Emerson Electric and Natures Miracle
Considering the 90-day investment horizon Emerson Electric is expected to generate 10.68 times less return on investment than Natures Miracle. But when comparing it to its historical volatility, Emerson Electric is 24.19 times less risky than Natures Miracle. It trades about 0.43 of its potential returns per unit of risk. Natures Miracle Holding is currently generating about 0.19 of returns per unit of risk over similar time horizon. If you would invest 1.19 in Natures Miracle Holding on September 1, 2024 and sell it today you would lose (0.05) from holding Natures Miracle Holding or give up 4.2% of portfolio value over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Very Weak |
| Accuracy | 85.71% |
| Values | Daily Returns |
Emerson Electric vs. Natures Miracle Holding
Performance |
| Timeline |
| Emerson Electric |
| Natures Miracle Holding |
Emerson Electric and Natures Miracle Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Emerson Electric and Natures Miracle
The main advantage of trading using opposite Emerson Electric and Natures Miracle positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Emerson Electric position performs unexpectedly, Natures Miracle 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 Natures Miracle will offset losses from the drop in Natures Miracle's long position.| Emerson Electric vs. Dover | Emerson Electric vs. Parker Hannifin | Emerson Electric vs. Pentair PLC | Emerson Electric vs. Eaton PLC |
| Natures Miracle vs. Barrick Gold Corp | Natures Miracle vs. Cumberland Pharmaceuticals | Natures Miracle vs. Teleflex Incorporated | Natures Miracle vs. Viemed Healthcare |
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 Fundamental Analysis module to view fundamental data based on most recent published financial statements.
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