Correlation Between Jeld Wen and Emerson Electric
Can any of the company-specific risk be diversified away by investing in both Jeld Wen and Emerson Electric 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 Jeld Wen and Emerson Electric into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Jeld Wen Holding and Emerson Electric, you can compare the effects of market volatilities on Jeld Wen and Emerson Electric 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 Jeld Wen with a short position of Emerson Electric. Check out your portfolio center. Please also check ongoing floating volatility patterns of Jeld Wen and Emerson Electric.
Diversification Opportunities for Jeld Wen and Emerson Electric
-0.89 | Correlation Coefficient |
Pay attention - limited upside
The 3 months correlation between Jeld and Emerson is -0.89. Overlapping area represents the amount of risk that can be diversified away by holding Jeld Wen Holding and Emerson Electric in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Emerson Electric and Jeld Wen 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 Jeld Wen Holding are associated (or correlated) with Emerson Electric. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Emerson Electric has no effect on the direction of Jeld Wen i.e., Jeld Wen and Emerson Electric go up and down completely randomly.
Pair Corralation between Jeld Wen and Emerson Electric
Given the investment horizon of 90 days Jeld Wen Holding is expected to under-perform the Emerson Electric. In addition to that, Jeld Wen is 2.18 times more volatile than Emerson Electric. It trades about -0.06 of its total potential returns per unit of risk. Emerson Electric is currently generating about 0.08 per unit of volatility. If you would invest 10,515 in Emerson Electric on September 24, 2024 and sell it today you would earn a total of 1,894 from holding Emerson Electric or generate 18.01% return on investment over 90 days.
Time Period | 3 Months [change] |
Direction | Moves Against |
Strength | Significant |
Accuracy | 99.21% |
Values | Daily Returns |
Jeld Wen Holding vs. Emerson Electric
Performance |
Timeline |
Jeld Wen Holding |
Emerson Electric |
Jeld Wen and Emerson Electric Volatility Contrast
Predicted Return Density |
Returns |
Pair Trading with Jeld Wen and Emerson Electric
The main advantage of trading using opposite Jeld Wen and Emerson Electric positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Jeld Wen position performs unexpectedly, Emerson Electric 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 Emerson Electric will offset losses from the drop in Emerson Electric's long position.Jeld Wen vs. Fortune Brands Innovations | Jeld Wen vs. Johnson Controls International | Jeld Wen vs. Builders FirstSource | Jeld Wen vs. Masco |
Emerson Electric vs. Dover | Emerson Electric vs. Parker Hannifin | Emerson Electric vs. Pentair PLC | Emerson Electric vs. Eaton PLC |
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 Portfolio Anywhere module to track or share privately all of your investments from the convenience of any device.
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