Correlation Between Emerson Radio and T.J. Maxx
Can any of the company-specific risk be diversified away by investing in both Emerson Radio and T.J. Maxx 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 T.J. Maxx into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Emerson Radio and The TJX Companies, you can compare the effects of market volatilities on Emerson Radio and T.J. Maxx 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 T.J. Maxx. Check out your portfolio center. Please also check ongoing floating volatility patterns of Emerson Radio and T.J. Maxx.
Diversification Opportunities for Emerson Radio and T.J. Maxx
-0.58 | Correlation Coefficient |
Excellent diversification
The 3 months correlation between Emerson and T.J. is -0.58. Overlapping area represents the amount of risk that can be diversified away by holding Emerson Radio and The TJX Companies in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on TJX Companies 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 T.J. Maxx. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of TJX Companies has no effect on the direction of Emerson Radio i.e., Emerson Radio and T.J. Maxx go up and down completely randomly.
Pair Corralation between Emerson Radio and T.J. Maxx
Considering the 90-day investment horizon Emerson Radio is expected to under-perform the T.J. Maxx. In addition to that, Emerson Radio is 3.88 times more volatile than The TJX Companies. It trades about -0.27 of its total potential returns per unit of risk. The TJX Companies is currently generating about 0.42 per unit of volatility. If you would invest 11,382 in The TJX Companies on August 27, 2024 and sell it today you would earn a total of 765.00 from holding The TJX Companies or generate 6.72% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Very Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
Emerson Radio vs. The TJX Companies
Performance |
| Timeline |
| Emerson Radio |
| TJX Companies |
Emerson Radio and T.J. Maxx Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Emerson Radio and T.J. Maxx
The main advantage of trading using opposite Emerson Radio and T.J. Maxx positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Emerson Radio position performs unexpectedly, T.J. Maxx 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 T.J. Maxx will offset losses from the drop in T.J. Maxx's long position.| Emerson Radio vs. VOXX International | Emerson Radio vs. LG Display Co | Emerson Radio vs. Vizio Holding Corp | Emerson Radio vs. Wearable Devices |
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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 Equity Valuation module to check real value of public entities based on technical and fundamental data.
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