Correlation Between SPDR Series and Emerson Electric
Can any of the company-specific risk be diversified away by investing in both SPDR Series 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 SPDR Series and Emerson Electric into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between SPDR Series Trust and Emerson Electric Co, you can compare the effects of market volatilities on SPDR Series 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 SPDR Series with a short position of Emerson Electric. Check out your portfolio center. Please also check ongoing floating volatility patterns of SPDR Series and Emerson Electric.
Diversification Opportunities for SPDR Series and Emerson Electric
-0.16 | Correlation Coefficient |
Good diversification
The 3 months correlation between SPDR and Emerson is -0.16. Overlapping area represents the amount of risk that can be diversified away by holding SPDR Series Trust and Emerson Electric Co in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Emerson Electric and SPDR Series 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 SPDR Series Trust 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 SPDR Series i.e., SPDR Series and Emerson Electric go up and down completely randomly.
Pair Corralation between SPDR Series and Emerson Electric
Assuming the 90 days trading horizon SPDR Series Trust is expected to generate 0.53 times more return on investment than Emerson Electric. However, SPDR Series Trust is 1.9 times less risky than Emerson Electric. It trades about -0.38 of its potential returns per unit of risk. Emerson Electric Co is currently generating about -0.3 per unit of risk. If you would invest 274,116 in SPDR Series Trust on December 10, 2024 and sell it today you would lose (19,993) from holding SPDR Series Trust or give up 7.29% of portfolio value over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Insignificant |
| Accuracy | 95.24% |
| Values | Daily Returns |
SPDR Series Trust vs. Emerson Electric Co
Performance |
| Timeline |
| SPDR Series Trust |
| Emerson Electric |
SPDR Series and Emerson Electric Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with SPDR Series and Emerson Electric
The main advantage of trading using opposite SPDR Series and Emerson Electric positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if SPDR Series 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.| SPDR Series vs. SPDR Dow Jones | SPDR Series vs. SPDR Gold Trust | SPDR Series vs. SPDR SP 500 | SPDR Series vs. SPDR SP Regional |
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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 Top Crypto Exchanges module to search and analyze digital assets across top global cryptocurrency exchanges.
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