Correlation Between Emerson Radio and AGL Energy
Can any of the company-specific risk be diversified away by investing in both Emerson Radio and AGL Energy 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 Radio and AGL Energy into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Emerson Radio and AGL Energy Limited, you can compare the effects of market volatilities on Emerson Radio and AGL Energy 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 Radio with a short position of AGL Energy. Check out your portfolio center. Please also check ongoing floating volatility patterns of Emerson Radio and AGL Energy.
Diversification Opportunities for Emerson Radio and AGL Energy
0.07 | Correlation Coefficient |
Significant diversification
The 3 months correlation between Emerson and AGL is 0.07. Overlapping area represents the amount of risk that can be diversified away by holding Emerson Radio and AGL Energy Limited in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on AGL Energy Limited and Emerson Radio 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 Radio are associated (or correlated) with AGL Energy. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of AGL Energy Limited has no effect on the direction of Emerson Radio i.e., Emerson Radio and AGL Energy go up and down completely randomly.
Pair Corralation between Emerson Radio and AGL Energy
Considering the 90-day investment horizon Emerson Radio is expected to under-perform the AGL Energy. In addition to that, Emerson Radio is 1.65 times more volatile than AGL Energy Limited. It trades about -0.03 of its total potential returns per unit of risk. AGL Energy Limited is currently generating about 0.06 per unit of volatility. If you would invest 610.00 in AGL Energy Limited on September 3, 2024 and sell it today you would earn a total of 95.00 from holding AGL Energy Limited or generate 15.57% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Insignificant |
| Accuracy | 57.49% |
| Values | Daily Returns |
Emerson Radio vs. AGL Energy Limited
Performance |
| Timeline |
| Emerson Radio |
| AGL Energy Limited |
Risk-Adjusted Performance
0 of 100
Weak | Strong |
Very Weak
Emerson Radio and AGL Energy Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Emerson Radio and AGL Energy
The main advantage of trading using opposite Emerson Radio and AGL Energy positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Emerson Radio position performs unexpectedly, AGL Energy 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 AGL Energy will offset losses from the drop in AGL Energy's long position.| Emerson Radio vs. VOXX International | Emerson Radio vs. LG Display Co | Emerson Radio vs. Vizio Holding Corp | Emerson Radio vs. Turtle Beach Corp |
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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 My Watchlist Analysis module to analyze my current watchlist and to refresh optimization strategy. Macroaxis watchlist is based on self-learning algorithm to remember stocks you like.
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