Correlation Between Rockwell Automation and Emerson Electric
Can any of the company-specific risk be diversified away by investing in both Rockwell Automation 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 Rockwell Automation and Emerson Electric into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Rockwell Automation and Emerson Electric, you can compare the effects of market volatilities on Rockwell Automation 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 Rockwell Automation with a short position of Emerson Electric. Check out your portfolio center. Please also check ongoing floating volatility patterns of Rockwell Automation and Emerson Electric.
Diversification Opportunities for Rockwell Automation and Emerson Electric
0.89 | Correlation Coefficient |
Very poor diversification
The 3 months correlation between Rockwell and Emerson is 0.89. Overlapping area represents the amount of risk that can be diversified away by holding Rockwell Automation and Emerson Electric in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Emerson Electric and Rockwell Automation 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 Rockwell Automation 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 Rockwell Automation i.e., Rockwell Automation and Emerson Electric go up and down completely randomly.
Pair Corralation between Rockwell Automation and Emerson Electric
Considering the 90-day investment horizon Rockwell Automation is expected to generate 1.67 times less return on investment than Emerson Electric. In addition to that, Rockwell Automation is 1.24 times more volatile than Emerson Electric. It trades about 0.03 of its total potential returns per unit of risk. Emerson Electric is currently generating about 0.06 per unit of volatility. If you would invest 9,043 in Emerson Electric on August 27, 2024 and sell it today you would earn a total of 3,964 from holding Emerson Electric or generate 43.84% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Strong |
| Accuracy | 100.0% |
| Values | Daily Returns |
Rockwell Automation vs. Emerson Electric
Performance |
| Timeline |
| Rockwell Automation |
| Emerson Electric |
Rockwell Automation and Emerson Electric Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Rockwell Automation and Emerson Electric
The main advantage of trading using opposite Rockwell Automation and Emerson Electric positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Rockwell Automation 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.| Rockwell Automation vs. Dover | Rockwell Automation vs. Illinois Tool Works | Rockwell Automation vs. Ingersoll Rand | Rockwell Automation vs. Eaton PLC |
| 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 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.
Other Complementary Tools
| AI Portfolio Architect Use AI to generate optimal portfolios and find profitable investment opportunities | |
| Insider Screener Find insiders across different sectors to evaluate their impact on performance | |
| Watchlist Optimization Optimize watchlists to build efficient portfolios or rebalance existing positions based on the mean-variance optimization algorithm | |
| Share Portfolio Track or share privately all of your investments from the convenience of any device | |
| Risk-Return Analysis View associations between returns expected from investment and the risk you assume |