Correlation Between Hf Foods and Emerson Electric
Can any of the company-specific risk be diversified away by investing in both Hf Foods 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 Hf Foods and Emerson Electric into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Hf Foods Group and Emerson Electric, you can compare the effects of market volatilities on Hf Foods 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 Hf Foods with a short position of Emerson Electric. Check out your portfolio center. Please also check ongoing floating volatility patterns of Hf Foods and Emerson Electric.
Diversification Opportunities for Hf Foods and Emerson Electric
0.4 | Correlation Coefficient |
Very weak diversification
The 3 months correlation between HFFG and Emerson is 0.4. Overlapping area represents the amount of risk that can be diversified away by holding Hf Foods Group and Emerson Electric in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Emerson Electric and Hf Foods 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 Hf Foods 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 Hf Foods i.e., Hf Foods and Emerson Electric go up and down completely randomly.
Pair Corralation between Hf Foods and Emerson Electric
Given the investment horizon of 90 days Hf Foods is expected to generate 2.88 times less return on investment than Emerson Electric. In addition to that, Hf Foods is 2.42 times more volatile than Emerson Electric. It trades about 0.01 of its total potential returns per unit of risk. Emerson Electric is currently generating about 0.08 per unit of volatility. If you would invest 10,539 in Emerson Electric on August 27, 2024 and sell it today you would earn a total of 2,468 from holding Emerson Electric or generate 23.42% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
Hf Foods Group vs. Emerson Electric
Performance |
| Timeline |
| Hf Foods Group |
| Emerson Electric |
Hf Foods and Emerson Electric Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Hf Foods and Emerson Electric
The main advantage of trading using opposite Hf Foods and Emerson Electric positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Hf Foods 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.| Hf Foods vs. Innovative Food Hldg | Hf Foods vs. G Willi Food International | Hf Foods vs. Calavo Growers | Hf Foods vs. The Chefs Warehouse |
| Emerson Electric vs. Graco Inc | Emerson Electric vs. Franklin Electric Co | Emerson Electric vs. Flowserve | Emerson Electric vs. Donaldson |
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 Fundamentals Comparison module to compare fundamentals across multiple equities to find investing opportunities.
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