Correlation Between Emerson Electric and Kornit Digital

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

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

Diversification Opportunities for Emerson Electric and Kornit Digital

0.93

Correlation Coefficient

Emerson Electric  Kornit Digital

Almost no diversification

The 3 months correlation between Emerson and Kornit is 0.93. Overlapping area represents the amount of risk that can be diversified away by holding Emerson Electric and Kornit Digital in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Kornit Digital 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 Kornit Digital. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Kornit Digital has no effect on the direction of Emerson Electric i.e., Emerson Electric and Kornit Digital go up and down completely randomly.

Pair Corralation between Emerson Electric and Kornit Digital

Considering the 90-day investment horizon Emerson Electric is expected to generate 1.01 times more return on investment than Kornit Digital. However, Emerson Electric is 1.01 times more volatile than Kornit Digital. It trades about 0.03 of its potential returns per unit of risk. Kornit Digital is currently generating about -0.35 per unit of risk. If you would invest  12,393  in Emerson Electric on October 22, 2024 and sell it today you would earn a total of  60.00  from holding Emerson Electric or generate 0.48% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Together
Strength	Very Strong
Accuracy	100.0%
Values	Daily Returns

Emerson Electric  vs.  Kornit Digital

Emerson Electric

Risk-Adjusted Performance

10 of 100

OK

Compared to the overall equity markets, risk-adjusted returns on investments in Emerson Electric are ranked lower than 10 (%) 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.

Kornit Digital

Risk-Adjusted Performance

9 of 100

OK

Compared to the overall equity markets, risk-adjusted returns on investments in Kornit Digital are ranked lower than 9 (%) of all global equities and portfolios over the last 90 days. In spite of comparatively unsteady basic indicators, Kornit Digital unveiled solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with Emerson Electric and Kornit Digital

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

The idea behind Emerson Electric and Kornit Digital 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 Earnings Calls module to check upcoming earnings announcements updated hourly across public exchanges.