Correlation Between Enerpac Tool and Emerson Electric
Can any of the company-specific risk be diversified away by investing in both Enerpac Tool and Emerson Electric 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 Enerpac Tool and Emerson Electric into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Enerpac Tool Group and Emerson Electric, you can compare the effects of market volatilities on Enerpac Tool and Emerson Electric 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 Enerpac Tool with a short position of Emerson Electric. Check out your portfolio center. Please also check ongoing floating volatility patterns of Enerpac Tool and Emerson Electric.
Diversification Opportunities for Enerpac Tool and Emerson Electric
0.93 | Correlation Coefficient |
Almost no diversification
The 3 months correlation between Enerpac and Emerson is 0.93. Overlapping area represents the amount of risk that can be diversified away by holding Enerpac Tool Group and Emerson Electric in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Emerson Electric and Enerpac Tool 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 Enerpac Tool Group are associated (or correlated) with Emerson Electric. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Emerson Electric has no effect on the direction of Enerpac Tool i.e., Enerpac Tool and Emerson Electric go up and down completely randomly.
Pair Corralation between Enerpac Tool and Emerson Electric
Given the investment horizon of 90 days Enerpac Tool Group is expected to generate 0.9 times more return on investment than Emerson Electric. However, Enerpac Tool Group is 1.11 times less risky than Emerson Electric. It trades about 0.12 of its potential returns per unit of risk. Emerson Electric is currently generating about 0.11 per unit of risk. If you would invest 3,813 in Enerpac Tool Group on September 2, 2024 and sell it today you would earn a total of 1,013 from holding Enerpac Tool Group or generate 26.57% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Very Strong |
| Accuracy | 100.0% |
| Values | Daily Returns |
Enerpac Tool Group vs. Emerson Electric
Performance |
| Timeline |
| Enerpac Tool Group |
| Emerson Electric |
Enerpac Tool and Emerson Electric Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Enerpac Tool and Emerson Electric
The main advantage of trading using opposite Enerpac Tool and Emerson Electric positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Enerpac Tool position performs unexpectedly, Emerson Electric 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 Emerson Electric will offset losses from the drop in Emerson Electric's long position.| Enerpac Tool vs. Omega Flex | Enerpac Tool vs. Luxfer Holdings PLC | Enerpac Tool vs. Gorman Rupp | Enerpac Tool vs. John Bean Technologies |
| Emerson Electric vs. Illinois Tool Works | Emerson Electric vs. Dover | Emerson Electric vs. Cummins | Emerson Electric vs. Parker Hannifin |
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 Pattern Recognition module to use different Pattern Recognition models to time the market across multiple global exchanges.
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