Correlation Between Emerson Electric and NESNVX

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

By analyzing existing cross correlation between Emerson Electric and NESNVX 4125 01 OCT 27, you can compare the effects of market volatilities on Emerson Electric and NESNVX 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 NESNVX. Check out your portfolio center. Please also check ongoing floating volatility patterns of Emerson Electric and NESNVX.

Diversification Opportunities for Emerson Electric and NESNVX

0.44

Correlation Coefficient

Emerson Electric  NESNVX

Very weak diversification

The 3 months correlation between Emerson and NESNVX is 0.44. Overlapping area represents the amount of risk that can be diversified away by holding Emerson Electric and NESNVX 4125 01 OCT 27 in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on NESNVX 4125 01 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 NESNVX. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of NESNVX 4125 01 has no effect on the direction of Emerson Electric i.e., Emerson Electric and NESNVX go up and down completely randomly.

Pair Corralation between Emerson Electric and NESNVX

Considering the 90-day investment horizon Emerson Electric is expected to under-perform the NESNVX. In addition to that, Emerson Electric is 5.0 times more volatile than NESNVX 4125 01 OCT 27. It trades about -0.2 of its total potential returns per unit of risk. NESNVX 4125 01 OCT 27 is currently generating about -0.44 per unit of volatility. If you would invest  9,941  in NESNVX 4125 01 OCT 27 on October 8, 2024 and sell it today you would lose (146.00) from holding NESNVX 4125 01 OCT 27 or give up 1.47% of portfolio value over 90 days.

Time Period	3 Months [change]
Direction	Moves Together
Strength	Weak
Accuracy	63.16%
Values	Daily Returns

Emerson Electric  vs.  NESNVX 4125 01 OCT 27

Emerson Electric

Risk-Adjusted Performance

9 of 100

OK

Compared to the overall equity markets, risk-adjusted returns on investments in Emerson Electric are ranked lower than 9 (%) 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.

NESNVX 4125 01

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days NESNVX 4125 01 OCT 27 has generated negative risk-adjusted returns adding no value to investors with long positions. Despite somewhat strong basic indicators, NESNVX is not utilizing all of its potentials. The latest stock price disturbance, may contribute to short-term losses for the investors.

Pair Trading with Emerson Electric and NESNVX

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

The idea behind Emerson Electric and NESNVX 4125 01 OCT 27 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 Money Managers module to screen money managers from public funds and ETFs managed around the world.