Correlation Between Emerson Electric and OZ Minerals
Can any of the company-specific risk be diversified away by investing in both Emerson Electric and OZ Minerals 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 OZ Minerals into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Emerson Electric and OZ Minerals Limited, you can compare the effects of market volatilities on Emerson Electric and OZ Minerals 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 OZ Minerals. Check out your portfolio center. Please also check ongoing floating volatility patterns of Emerson Electric and OZ Minerals.
Diversification Opportunities for Emerson Electric and OZ Minerals
0.26 | Correlation Coefficient |
Modest diversification
The 3 months correlation between Emerson and OZMLF is 0.26. Overlapping area represents the amount of risk that can be diversified away by holding Emerson Electric and OZ Minerals Limited in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on OZ Minerals Limited 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 OZ Minerals. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of OZ Minerals Limited has no effect on the direction of Emerson Electric i.e., Emerson Electric and OZ Minerals go up and down completely randomly.
Pair Corralation between Emerson Electric and OZ Minerals
If you would invest 1,900 in OZ Minerals Limited on September 25, 2024 and sell it today you would earn a total of 0.00 from holding OZ Minerals Limited or generate 0.0% return on investment over 90 days.
Time Period | 3 Months [change] |
Direction | Moves Together |
Strength | Very Weak |
Accuracy | 5.0% |
Values | Daily Returns |
Emerson Electric vs. OZ Minerals Limited
Performance |
Timeline |
Emerson Electric |
OZ Minerals Limited |
Risk-Adjusted Performance
0 of 100
Weak | Strong |
Very Weak
Emerson Electric and OZ Minerals Volatility Contrast
Predicted Return Density |
Returns |
Pair Trading with Emerson Electric and OZ Minerals
The main advantage of trading using opposite Emerson Electric and OZ Minerals positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Emerson Electric position performs unexpectedly, OZ Minerals 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 OZ Minerals will offset losses from the drop in OZ Minerals' 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 Fundamentals Comparison module to compare fundamentals across multiple equities to find investing opportunities.
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