Correlation Between Scientific Games and EMERSON ELECTRIC
Can any of the company-specific risk be diversified away by investing in both Scientific Games 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 Scientific Games and EMERSON ELECTRIC into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Scientific Games and EMERSON ELECTRIC, you can compare the effects of market volatilities on Scientific Games 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 Scientific Games with a short position of EMERSON ELECTRIC. Check out your portfolio center. Please also check ongoing floating volatility patterns of Scientific Games and EMERSON ELECTRIC.
Diversification Opportunities for Scientific Games and EMERSON ELECTRIC
0.26 | Correlation Coefficient |
Modest diversification
The 3 months correlation between Scientific and EMERSON is 0.26. Overlapping area represents the amount of risk that can be diversified away by holding Scientific Games and EMERSON ELECTRIC in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on EMERSON ELECTRIC and Scientific Games 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 Scientific Games 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 Scientific Games i.e., Scientific Games and EMERSON ELECTRIC go up and down completely randomly.
Pair Corralation between Scientific Games and EMERSON ELECTRIC
Assuming the 90 days horizon Scientific Games is expected to generate 1.07 times less return on investment than EMERSON ELECTRIC. But when comparing it to its historical volatility, Scientific Games is 1.07 times less risky than EMERSON ELECTRIC. It trades about 0.2 of its potential returns per unit of risk. EMERSON ELECTRIC is currently generating about 0.2 of returns per unit of risk over similar time horizon. If you would invest 12,022 in EMERSON ELECTRIC on October 25, 2024 and sell it today you would earn a total of 468.00 from holding EMERSON ELECTRIC or generate 3.89% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Very Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
Scientific Games vs. EMERSON ELECTRIC
Performance |
| Timeline |
| Scientific Games |
| EMERSON ELECTRIC |
Scientific Games and EMERSON ELECTRIC Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Scientific Games and EMERSON ELECTRIC
The main advantage of trading using opposite Scientific Games and EMERSON ELECTRIC positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Scientific Games 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.| Scientific Games vs. RCS MediaGroup SpA | Scientific Games vs. Mitsui Chemicals | Scientific Games vs. REMEDY ENTERTAINMENT OYJ | Scientific Games vs. CHEMICAL INDUSTRIES |
| EMERSON ELECTRIC vs. SEKISUI CHEMICAL | EMERSON ELECTRIC vs. BORR DRILLING NEW | EMERSON ELECTRIC vs. KINGBOARD CHEMICAL | EMERSON ELECTRIC vs. Columbia Sportswear |
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.
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