Correlation Between IShares Trust and Emerson Electric
Can any of the company-specific risk be diversified away by investing in both IShares Trust 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 IShares Trust and Emerson Electric into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between iShares Trust and Emerson Electric Co, you can compare the effects of market volatilities on IShares Trust 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 IShares Trust with a short position of Emerson Electric. Check out your portfolio center. Please also check ongoing floating volatility patterns of IShares Trust and Emerson Electric.
Diversification Opportunities for IShares Trust and Emerson Electric
-0.15 | Correlation Coefficient |
Good diversification
The 3 months correlation between IShares and Emerson is -0.15. Overlapping area represents the amount of risk that can be diversified away by holding iShares Trust and Emerson Electric Co in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Emerson Electric and IShares Trust 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 iShares Trust 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 IShares Trust i.e., IShares Trust and Emerson Electric go up and down completely randomly.
Pair Corralation between IShares Trust and Emerson Electric
Assuming the 90 days trading horizon iShares Trust is expected to under-perform the Emerson Electric. But the etf apears to be less risky and, when comparing its historical volatility, iShares Trust is 1.62 times less risky than Emerson Electric. The etf trades about -0.61 of its potential returns per unit of risk. The Emerson Electric Co is currently generating about -0.3 of returns per unit of risk over similar time horizon. If you would invest 263,580 in Emerson Electric Co on December 11, 2024 and sell it today you would lose (30,244) from holding Emerson Electric Co or give up 11.47% of portfolio value over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Insignificant |
| Accuracy | 100.0% |
| Values | Daily Returns |
iShares Trust vs. Emerson Electric Co
Performance |
| Timeline |
| iShares Trust |
| Emerson Electric |
IShares Trust and Emerson Electric Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with IShares Trust and Emerson Electric
The main advantage of trading using opposite IShares Trust and Emerson Electric positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if IShares Trust 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.| IShares Trust vs. iShares Trust | IShares Trust vs. iShares Trust | IShares Trust vs. iShares Trust | IShares Trust vs. iShares Trust |
| Emerson Electric vs. United States Steel | Emerson Electric vs. Air Transport Services | Emerson Electric vs. GMxico Transportes SAB | Emerson Electric vs. Ross Stores |
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 Efficient Frontier module to plot and analyze your portfolio and positions against risk-return landscape of the market..
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