Correlation Between Emerson Electric and Gannett
Can any of the company-specific risk be diversified away by investing in both Emerson Electric and Gannett 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 Gannett into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Emerson Electric and Gannett Co, you can compare the effects of market volatilities on Emerson Electric and Gannett 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 Gannett. Check out your portfolio center. Please also check ongoing floating volatility patterns of Emerson Electric and Gannett.
Diversification Opportunities for Emerson Electric and Gannett
-0.3 | Correlation Coefficient |
Very good diversification
The 3 months correlation between Emerson and Gannett is -0.3. Overlapping area represents the amount of risk that can be diversified away by holding Emerson Electric and Gannett Co in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Gannett 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 Gannett. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Gannett has no effect on the direction of Emerson Electric i.e., Emerson Electric and Gannett go up and down completely randomly.
Pair Corralation between Emerson Electric and Gannett
Considering the 90-day investment horizon Emerson Electric is expected to generate 0.44 times more return on investment than Gannett. However, Emerson Electric is 2.25 times less risky than Gannett. It trades about 0.09 of its potential returns per unit of risk. Gannett Co is currently generating about 0.0 per unit of risk. If you would invest 11,043 in Emerson Electric on October 10, 2024 and sell it today you would earn a total of 1,025 from holding Emerson Electric or generate 9.28% return on investment over 90 days.
Time Period | 3 Months [change] |
Direction | Moves Against |
Strength | Insignificant |
Accuracy | 100.0% |
Values | Daily Returns |
Emerson Electric vs. Gannett Co
Performance |
Timeline |
Emerson Electric |
Gannett |
Emerson Electric and Gannett Volatility Contrast
Predicted Return Density |
Returns |
Pair Trading with Emerson Electric and Gannett
The main advantage of trading using opposite Emerson Electric and Gannett positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Emerson Electric position performs unexpectedly, Gannett 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 Gannett will offset losses from the drop in Gannett's long position.Emerson Electric vs. Dover | Emerson Electric vs. Parker Hannifin | Emerson Electric vs. Pentair PLC | Emerson Electric vs. Eaton PLC |
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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 Crypto Correlations module to use cryptocurrency correlation module to diversify your cryptocurrency portfolio across multiple coins.
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