Correlation Between Emerson Electric and Taiyo Yuden
Can any of the company-specific risk be diversified away by investing in both Emerson Electric and Taiyo Yuden 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 Taiyo Yuden into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Emerson Electric and Taiyo Yuden, you can compare the effects of market volatilities on Emerson Electric and Taiyo Yuden 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 Taiyo Yuden. Check out your portfolio center. Please also check ongoing floating volatility patterns of Emerson Electric and Taiyo Yuden.
Diversification Opportunities for Emerson Electric and Taiyo Yuden
0.56 | Correlation Coefficient |
Very weak diversification
The 3 months correlation between Emerson and Taiyo is 0.56. Overlapping area represents the amount of risk that can be diversified away by holding Emerson Electric and Taiyo Yuden in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Taiyo Yuden 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 Taiyo Yuden. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Taiyo Yuden has no effect on the direction of Emerson Electric i.e., Emerson Electric and Taiyo Yuden go up and down completely randomly.
Pair Corralation between Emerson Electric and Taiyo Yuden
If you would invest 10,936 in Emerson Electric on September 4, 2024 and sell it today you would earn a total of 2,441 from holding Emerson Electric or generate 22.32% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Weak |
| Accuracy | 4.76% |
| Values | Daily Returns |
Emerson Electric vs. Taiyo Yuden
Performance |
| Timeline |
| Emerson Electric |
| Taiyo Yuden |
Risk-Adjusted Performance
0 of 100
Weak | Strong |
Very Weak
Emerson Electric and Taiyo Yuden Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Emerson Electric and Taiyo Yuden
The main advantage of trading using opposite Emerson Electric and Taiyo Yuden positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Emerson Electric position performs unexpectedly, Taiyo Yuden 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 Taiyo Yuden will offset losses from the drop in Taiyo Yuden'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 Risk-Return Analysis module to view associations between returns expected from investment and the risk you assume.
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