Correlation Between Keurig Dr and Emerson Electric
Can any of the company-specific risk be diversified away by investing in both Keurig Dr 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 Keurig Dr and Emerson Electric into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Keurig Dr Pepper and Emerson Electric, you can compare the effects of market volatilities on Keurig Dr 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 Keurig Dr with a short position of Emerson Electric. Check out your portfolio center. Please also check ongoing floating volatility patterns of Keurig Dr and Emerson Electric.
Diversification Opportunities for Keurig Dr and Emerson Electric
-0.8 | Correlation Coefficient |
Pay attention - limited upside
The 3 months correlation between Keurig and Emerson is -0.8. Overlapping area represents the amount of risk that can be diversified away by holding Keurig Dr Pepper and Emerson Electric in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Emerson Electric and Keurig Dr 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 Keurig Dr Pepper 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 Keurig Dr i.e., Keurig Dr and Emerson Electric go up and down completely randomly.
Pair Corralation between Keurig Dr and Emerson Electric
Considering the 90-day investment horizon Keurig Dr Pepper is expected to under-perform the Emerson Electric. But the stock apears to be less risky and, when comparing its historical volatility, Keurig Dr Pepper is 1.7 times less risky than Emerson Electric. The stock trades about -0.01 of its potential returns per unit of risk. The Emerson Electric is currently generating about 0.42 of returns per unit of risk over similar time horizon. 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 Against |
| Strength | Significant |
| Accuracy | 100.0% |
| Values | Daily Returns |
Keurig Dr Pepper vs. Emerson Electric
Performance |
| Timeline |
| Keurig Dr Pepper |
| Emerson Electric |
Keurig Dr and Emerson Electric Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Keurig Dr and Emerson Electric
The main advantage of trading using opposite Keurig Dr and Emerson Electric positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Keurig Dr 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.| Keurig Dr vs. Celsius Holdings | Keurig Dr vs. Vita Coco | Keurig Dr vs. PepsiCo | Keurig Dr vs. Coca Cola Femsa SAB |
| Emerson Electric vs. Dover | Emerson Electric vs. Parker Hannifin | Emerson Electric vs. Pentair PLC | Emerson Electric vs. Eaton PLC |
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 Latest Portfolios module to quick portfolio dashboard that showcases your latest portfolios.
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