Correlation Between Cadeler AS and Emerson Electric

Can any of the company-specific risk be diversified away by investing in both Cadeler AS 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 Cadeler AS and Emerson Electric into the same portfolio, which is an essential part of the fundamental portfolio management process.

By analyzing existing cross correlation between Cadeler AS and Emerson Electric, you can compare the effects of market volatilities on Cadeler AS 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 Cadeler AS with a short position of Emerson Electric. Check out your portfolio center. Please also check ongoing floating volatility patterns of Cadeler AS and Emerson Electric.

Diversification Opportunities for Cadeler AS and Emerson Electric

-0.86

Correlation Coefficient

Cadeler AS  Emerson Electric

Pay attention - limited upside

The 3 months correlation between Cadeler and Emerson is -0.86. Overlapping area represents the amount of risk that can be diversified away by holding Cadeler AS and Emerson Electric in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Emerson Electric and Cadeler AS 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 Cadeler AS 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 Cadeler AS i.e., Cadeler AS and Emerson Electric go up and down completely randomly.

Pair Corralation between Cadeler AS and Emerson Electric

Given the investment horizon of 90 days Cadeler AS is expected to generate 1.13 times more return on investment than Emerson Electric. However, Cadeler AS is 1.13 times more volatile than Emerson Electric. It trades about -0.23 of its potential returns per unit of risk. Emerson Electric is currently generating about -0.26 per unit of risk. If you would invest  2,396  in Cadeler AS on September 24, 2024 and sell it today you would lose (155.00) from holding Cadeler AS or give up 6.47% of portfolio value over 90 days.

Time Period	3 Months [change]
Direction	Moves Against
Strength	Significant
Accuracy	100.0%
Values	Daily Returns

Cadeler AS  vs.  Emerson Electric

Cadeler AS

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Cadeler AS has generated negative risk-adjusted returns adding no value to investors with long positions. Even with weak performance in the last few months, the Stock's essential indicators remain relatively invariable which may send shares a bit higher in January 2025. The latest agitation may also be a sign of long-running up-swing for the enterprise retail investors.

Emerson Electric

Risk-Adjusted Performance

11 of 100

Good

Compared to the overall equity markets, risk-adjusted returns on investments in Emerson Electric are ranked lower than 11 (%) of all global equities and portfolios over the last 90 days. Even with relatively abnormal primary indicators, Emerson Electric reported solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with Cadeler AS and Emerson Electric

The main advantage of trading using opposite Cadeler AS and Emerson Electric positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Cadeler AS 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.

The idea behind Cadeler AS and Emerson Electric pairs trading is to make the combined position market-neutral, meaning the overall market's direction will not affect its win or loss (or potential downside or upside). This can be achieved by designing a pairs trade with two highly correlated stocks or equities that operate in a similar space or sector, making it possible to obtain profits through simple and relatively low-risk investment.

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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.