Correlation Between Emerson Electric and KEURIG

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

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

Diversification Opportunities for Emerson Electric and KEURIG

0.0

Correlation Coefficient

Emerson Electric  KEURIG

Pay attention - limited upside

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

Pair Corralation between Emerson Electric and KEURIG

If you would invest  10,769  in Emerson Electric on October 25, 2024 and sell it today you would earn a total of  2,225  from holding Emerson Electric or generate 20.66% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Flat
Strength	Insignificant
Accuracy	1.69%
Values	Daily Returns

Emerson Electric  vs.  KEURIG DR PEPPER

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.

KEURIG DR PEPPER

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days KEURIG DR PEPPER has generated negative risk-adjusted returns adding no value to investors with long positions. Despite somewhat strong basic indicators, KEURIG is not utilizing all of its potentials. The current stock price disturbance, may contribute to short-term losses for the investors.

Pair Trading with Emerson Electric and KEURIG

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

The idea behind Emerson Electric and KEURIG DR PEPPER 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 Bond Analysis module to evaluate and analyze corporate bonds as a potential investment for your portfolios..