Correlation Between United Natural and Emerson Electric
Can any of the company-specific risk be diversified away by investing in both United Natural 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 United Natural and Emerson Electric into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between United Natural Foods and Emerson Electric Co, you can compare the effects of market volatilities on United Natural 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 United Natural with a short position of Emerson Electric. Check out your portfolio center. Please also check ongoing floating volatility patterns of United Natural and Emerson Electric.
Diversification Opportunities for United Natural and Emerson Electric
0.7 | Correlation Coefficient |
Poor diversification
The 3 months correlation between United and Emerson is 0.7. Overlapping area represents the amount of risk that can be diversified away by holding United Natural Foods and Emerson Electric Co in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Emerson Electric and United Natural 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 United Natural Foods 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 United Natural i.e., United Natural and Emerson Electric go up and down completely randomly.
Pair Corralation between United Natural and Emerson Electric
Assuming the 90 days horizon United Natural Foods is expected to under-perform the Emerson Electric. In addition to that, United Natural is 2.34 times more volatile than Emerson Electric Co. It trades about -0.01 of its total potential returns per unit of risk. Emerson Electric Co is currently generating about 0.06 per unit of volatility. If you would invest 8,562 in Emerson Electric Co on August 29, 2024 and sell it today you would earn a total of 4,158 from holding Emerson Electric Co or generate 48.56% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Significant |
| Accuracy | 99.8% |
| Values | Daily Returns |
United Natural Foods vs. Emerson Electric Co
Performance |
| Timeline |
| United Natural Foods |
| Emerson Electric |
United Natural and Emerson Electric Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with United Natural and Emerson Electric
The main advantage of trading using opposite United Natural and Emerson Electric positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if United Natural 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.| United Natural vs. Superior Plus Corp | United Natural vs. SIVERS SEMICONDUCTORS AB | United Natural vs. Talanx AG | United Natural vs. 2G ENERGY |
| Emerson Electric vs. GUARDANT HEALTH CL | Emerson Electric vs. NAKED WINES PLC | Emerson Electric vs. CITY OFFICE REIT | Emerson Electric vs. Infrastrutture Wireless Italiane |
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 Money Managers module to screen money managers from public funds and ETFs managed around the world.
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