Correlation Between Spirax-Sarco Engineering and Emerson Electric
Can any of the company-specific risk be diversified away by investing in both Spirax-Sarco Engineering 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 Spirax-Sarco Engineering and Emerson Electric into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Spirax Sarco Engineering PLC and Emerson Electric, you can compare the effects of market volatilities on Spirax-Sarco Engineering 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 Spirax-Sarco Engineering with a short position of Emerson Electric. Check out your portfolio center. Please also check ongoing floating volatility patterns of Spirax-Sarco Engineering and Emerson Electric.
Diversification Opportunities for Spirax-Sarco Engineering and Emerson Electric
-0.75 | Correlation Coefficient |
Pay attention - limited upside
The 3 months correlation between Spirax-Sarco and Emerson is -0.75. Overlapping area represents the amount of risk that can be diversified away by holding Spirax Sarco Engineering PLC and Emerson Electric in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Emerson Electric and Spirax-Sarco Engineering 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 Spirax Sarco Engineering PLC 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 Spirax-Sarco Engineering i.e., Spirax-Sarco Engineering and Emerson Electric go up and down completely randomly.
Pair Corralation between Spirax-Sarco Engineering and Emerson Electric
Assuming the 90 days horizon Spirax Sarco Engineering PLC is expected to under-perform the Emerson Electric. In addition to that, Spirax-Sarco Engineering is 1.2 times more volatile than Emerson Electric. It trades about -0.09 of its total potential returns per unit of risk. Emerson Electric is currently generating about 0.09 per unit of volatility. If you would invest 9,553 in Emerson Electric on August 25, 2024 and sell it today you would earn a total of 3,454 from holding Emerson Electric or generate 36.16% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Weak |
| Accuracy | 94.76% |
| Values | Daily Returns |
Spirax Sarco Engineering PLC vs. Emerson Electric
Performance |
| Timeline |
| Spirax-Sarco Engineering |
| Emerson Electric |
Spirax-Sarco Engineering and Emerson Electric Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Spirax-Sarco Engineering and Emerson Electric
The main advantage of trading using opposite Spirax-Sarco Engineering and Emerson Electric positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Spirax-Sarco Engineering 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.| Spirax-Sarco Engineering vs. Aumann AG | Spirax-Sarco Engineering vs. Arista Power | Spirax-Sarco Engineering vs. Atlas Copco AB | Spirax-Sarco Engineering vs. American Commerce Solutions |
| Emerson Electric vs. Graco Inc | Emerson Electric vs. Franklin Electric Co | Emerson Electric vs. Flowserve | Emerson Electric vs. Donaldson |
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 Funds Screener module to find actively-traded funds from around the world traded on over 30 global exchanges.
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