Correlation Between Emerson Radio and Mamas Creations
Can any of the company-specific risk be diversified away by investing in both Emerson Radio and Mamas Creations 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 Mamas Creations into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Emerson Radio and Mamas Creations, you can compare the effects of market volatilities on Emerson Radio and Mamas Creations 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 Mamas Creations. Check out your portfolio center. Please also check ongoing floating volatility patterns of Emerson Radio and Mamas Creations.
Diversification Opportunities for Emerson Radio and Mamas Creations
-0.6 | Correlation Coefficient |
Excellent diversification
The 3 months correlation between Emerson and Mamas is -0.6. Overlapping area represents the amount of risk that can be diversified away by holding Emerson Radio and Mamas Creations in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Mamas Creations 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 Mamas Creations. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Mamas Creations has no effect on the direction of Emerson Radio i.e., Emerson Radio and Mamas Creations go up and down completely randomly.
Pair Corralation between Emerson Radio and Mamas Creations
Considering the 90-day investment horizon Emerson Radio is expected to generate 2.52 times less return on investment than Mamas Creations. In addition to that, Emerson Radio is 1.28 times more volatile than Mamas Creations. It trades about 0.01 of its total potential returns per unit of risk. Mamas Creations is currently generating about 0.03 per unit of volatility. If you would invest 735.00 in Mamas Creations on October 22, 2024 and sell it today you would earn a total of 45.00 from holding Mamas Creations or generate 6.12% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Weak |
| Accuracy | 99.2% |
| Values | Daily Returns |
Emerson Radio vs. Mamas Creations
Performance |
| Timeline |
| Emerson Radio |
| Mamas Creations |
Emerson Radio and Mamas Creations Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Emerson Radio and Mamas Creations
The main advantage of trading using opposite Emerson Radio and Mamas Creations positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Emerson Radio position performs unexpectedly, Mamas Creations 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 Mamas Creations will offset losses from the drop in Mamas Creations' long position.| Emerson Radio vs. VOXX International | Emerson Radio vs. LG Display Co | Emerson Radio vs. Koss Corporation | Emerson Radio vs. Wearable Devices |
| Mamas Creations vs. National Beverage Corp | Mamas Creations vs. Compania Cervecerias Unidas | Mamas Creations vs. High Performance Beverages | Mamas Creations vs. PepsiCo |
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 Portfolio Volatility module to check portfolio volatility and analyze historical return density to properly model market risk.
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