Correlation Between Emerson Electric and Asure Software

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

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

Diversification Opportunities for Emerson Electric and Asure Software

0.0

Correlation Coefficient

Emerson Electric  Asure Software

Pay attention - limited upside

The 3 months correlation between Emerson and Asure is 0.0. Overlapping area represents the amount of risk that can be diversified away by holding Emerson Electric and Asure Software in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Asure Software and Emerson Electric 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 Emerson Electric are associated (or correlated) with Asure Software. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Asure Software has no effect on the direction of Emerson Electric i.e., Emerson Electric and Asure Software go up and down completely randomly.

Pair Corralation between Emerson Electric and Asure Software

Considering the 90-day investment horizon Emerson Electric is expected to under-perform the Asure Software. But the stock apears to be less risky and, when comparing its historical volatility, Emerson Electric is 2.04 times less risky than Asure Software. The stock trades about -0.03 of its potential returns per unit of risk. The Asure Software is currently generating about 0.25 of returns per unit of risk over similar time horizon. If you would invest  977.00  in Asure Software on October 25, 2024 and sell it today you would earn a total of  285.00  from holding Asure Software or generate 29.17% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Flat
Strength	Insignificant
Accuracy	97.44%
Values	Daily Returns

Emerson Electric  vs.  Asure Software

Emerson Electric

Risk-Adjusted Performance

14 of 100

Good

Compared to the overall equity markets, risk-adjusted returns on investments in Emerson Electric are ranked lower than 14 (%) of all global equities and portfolios over the last 90 days. Even with relatively unfluctuating primary indicators, Emerson Electric reported solid returns over the last few months and may actually be approaching a breakup point.

Asure Software

Risk-Adjusted Performance

10 of 100

Good

Compared to the overall equity markets, risk-adjusted returns on investments in Asure Software are ranked lower than 10 (%) of all global equities and portfolios over the last 90 days. Even with relatively weak basic indicators, Asure Software reported solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with Emerson Electric and Asure Software

The main advantage of trading using opposite Emerson Electric and Asure Software positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Emerson Electric position performs unexpectedly, Asure Software 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 Asure Software will offset losses from the drop in Asure Software's long position.

The idea behind Emerson Electric and Asure Software 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.

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 Fundamental Analysis module to view fundamental data based on most recent published financial statements.