Correlation Between Digilife Technologies and EMERSON ELECTRIC
Can any of the company-specific risk be diversified away by investing in both Digilife Technologies 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 Digilife Technologies and EMERSON ELECTRIC into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Digilife Technologies Limited and EMERSON ELECTRIC, you can compare the effects of market volatilities on Digilife Technologies 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 Digilife Technologies with a short position of EMERSON ELECTRIC. Check out your portfolio center. Please also check ongoing floating volatility patterns of Digilife Technologies and EMERSON ELECTRIC.
Diversification Opportunities for Digilife Technologies and EMERSON ELECTRIC
-0.37 | Correlation Coefficient |
Very good diversification
The 3 months correlation between Digilife and EMERSON is -0.37. Overlapping area represents the amount of risk that can be diversified away by holding Digilife Technologies Limited and EMERSON ELECTRIC in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on EMERSON ELECTRIC and Digilife Technologies 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 Digilife Technologies Limited 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 Digilife Technologies i.e., Digilife Technologies and EMERSON ELECTRIC go up and down completely randomly.
Pair Corralation between Digilife Technologies and EMERSON ELECTRIC
Assuming the 90 days trading horizon Digilife Technologies Limited is expected to under-perform the EMERSON ELECTRIC. In addition to that, Digilife Technologies is 4.29 times more volatile than EMERSON ELECTRIC. It trades about -0.05 of its total potential returns per unit of risk. EMERSON ELECTRIC is currently generating about 0.14 per unit of volatility. If you would invest 12,026 in EMERSON ELECTRIC on September 13, 2024 and sell it today you would earn a total of 420.00 from holding EMERSON ELECTRIC or generate 3.49% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Insignificant |
| Accuracy | 100.0% |
| Values | Daily Returns |
Digilife Technologies Limited vs. EMERSON ELECTRIC
Performance |
| Timeline |
| Digilife Technologies |
| EMERSON ELECTRIC |
Digilife Technologies and EMERSON ELECTRIC Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Digilife Technologies and EMERSON ELECTRIC
The main advantage of trading using opposite Digilife Technologies and EMERSON ELECTRIC positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Digilife Technologies 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.| Digilife Technologies vs. Superior Plus Corp | Digilife Technologies vs. SIVERS SEMICONDUCTORS AB | Digilife Technologies vs. Norsk Hydro ASA | Digilife Technologies vs. Reliance Steel Aluminum |
| EMERSON ELECTRIC vs. Australian Agricultural | EMERSON ELECTRIC vs. Singapore Telecommunications Limited | EMERSON ELECTRIC vs. H FARM SPA | EMERSON ELECTRIC vs. North American Construction |
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 Crypto Correlations module to use cryptocurrency correlation module to diversify your cryptocurrency portfolio across multiple coins.
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