Correlation Between Emerson Electric and Victory Integrity

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

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

Diversification Opportunities for Emerson Electric and Victory Integrity

0.82

Correlation Coefficient

Emerson Electric  Victory Integrity

Very poor diversification

The 3 months correlation between Emerson and Victory is 0.82. Overlapping area represents the amount of risk that can be diversified away by holding Emerson Electric and Victory Integrity Smallmid Cap in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Victory Integrity 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 Victory Integrity. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Victory Integrity has no effect on the direction of Emerson Electric i.e., Emerson Electric and Victory Integrity go up and down completely randomly.

Pair Corralation between Emerson Electric and Victory Integrity

Considering the 90-day investment horizon Emerson Electric is expected to generate 0.92 times more return on investment than Victory Integrity. However, Emerson Electric is 1.09 times less risky than Victory Integrity. It trades about -0.1 of its potential returns per unit of risk. Victory Integrity Smallmid Cap is currently generating about -0.19 per unit of risk. If you would invest  13,321  in Emerson Electric on December 2, 2024 and sell it today you would lose (1,160) from holding Emerson Electric or give up 8.71% of portfolio value over 90 days.

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

Emerson Electric  vs.  Victory Integrity Smallmid Cap

Emerson Electric

Risk-Adjusted Performance

Very Weak

Over the last 90 days Emerson Electric has generated negative risk-adjusted returns adding no value to investors with long positions. Even with latest abnormal performance, the Stock's primary indicators remain invariable and the latest agitation on Wall Street may also be a sign of long-running gains for the enterprise retail investors.

Victory Integrity

Risk-Adjusted Performance

Very Weak

Over the last 90 days Victory Integrity Smallmid Cap has generated negative risk-adjusted returns adding no value to fund investors. In spite of weak performance in the last few months, the Fund's basic indicators remain fairly strong which may send shares a bit higher in April 2025. The current disturbance may also be a sign of long term up-swing for the fund investors.

Pair Trading with Emerson Electric and Victory Integrity

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

The idea behind Emerson Electric and Victory Integrity Smallmid Cap 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 Aroon Oscillator module to analyze current equity momentum using Aroon Oscillator and other momentum ratios.