Correlation Between Emerson Electric and YanGuFang International
Can any of the company-specific risk be diversified away by investing in both Emerson Electric and YanGuFang International 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 YanGuFang International into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Emerson Electric and YanGuFang International Group, you can compare the effects of market volatilities on Emerson Electric and YanGuFang International 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 YanGuFang International. Check out your portfolio center. Please also check ongoing floating volatility patterns of Emerson Electric and YanGuFang International.
Diversification Opportunities for Emerson Electric and YanGuFang International
-0.7 | Correlation Coefficient |
Excellent diversification
The 3 months correlation between Emerson and YanGuFang is -0.7. Overlapping area represents the amount of risk that can be diversified away by holding Emerson Electric and YanGuFang International Group in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on YanGuFang International 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 YanGuFang International. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of YanGuFang International has no effect on the direction of Emerson Electric i.e., Emerson Electric and YanGuFang International go up and down completely randomly.
Pair Corralation between Emerson Electric and YanGuFang International
Considering the 90-day investment horizon Emerson Electric is expected to generate 0.17 times more return on investment than YanGuFang International. However, Emerson Electric is 5.98 times less risky than YanGuFang International. It trades about 0.05 of its potential returns per unit of risk. YanGuFang International Group is currently generating about -0.12 per unit of risk. If you would invest 9,265 in Emerson Electric on September 14, 2024 and sell it today you would earn a total of 3,851 from holding Emerson Electric or generate 41.57% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Weak |
| Accuracy | 58.91% |
| Values | Daily Returns |
Emerson Electric vs. YanGuFang International Group
Performance |
| Timeline |
| Emerson Electric |
| YanGuFang International |
Risk-Adjusted Performance
0 of 100
Weak | Strong |
Very Weak
Emerson Electric and YanGuFang International Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Emerson Electric and YanGuFang International
The main advantage of trading using opposite Emerson Electric and YanGuFang International positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Emerson Electric position performs unexpectedly, YanGuFang International 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 YanGuFang International will offset losses from the drop in YanGuFang International'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 Competition Analyzer module to analyze and compare many basic indicators for a group of related or unrelated entities.
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