Correlation Between Emerson Radio and 26442CAM6

Can any of the company-specific risk be diversified away by investing in both Emerson Radio and 26442CAM6 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 Radio and 26442CAM6 into the same portfolio, which is an essential part of the fundamental portfolio management process.

By analyzing existing cross correlation between Emerson Radio and DUKE ENERGY CAROLINAS, you can compare the effects of market volatilities on Emerson Radio and 26442CAM6 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 Radio with a short position of 26442CAM6. Check out your portfolio center. Please also check ongoing floating volatility patterns of Emerson Radio and 26442CAM6.

Diversification Opportunities for Emerson Radio and 26442CAM6

0.31

Correlation Coefficient

Emerson Radio  26442CAM6

Weak diversification

The 3 months correlation between Emerson and 26442CAM6 is 0.31. Overlapping area represents the amount of risk that can be diversified away by holding Emerson Radio and DUKE ENERGY CAROLINAS in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on DUKE ENERGY CAROLINAS and Emerson Radio 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 Radio are associated (or correlated) with 26442CAM6. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of DUKE ENERGY CAROLINAS has no effect on the direction of Emerson Radio i.e., Emerson Radio and 26442CAM6 go up and down completely randomly.

Pair Corralation between Emerson Radio and 26442CAM6

Considering the 90-day investment horizon Emerson Radio is expected to generate 4.84 times more return on investment than 26442CAM6. However, Emerson Radio is 4.84 times more volatile than DUKE ENERGY CAROLINAS. It trades about 0.01 of its potential returns per unit of risk. DUKE ENERGY CAROLINAS is currently generating about -0.11 per unit of risk. If you would invest  53.00  in Emerson Radio on October 23, 2024 and sell it today you would lose (2.00) from holding Emerson Radio or give up 3.77% of portfolio value over 90 days.

Time Period	3 Months [change]
Direction	Moves Together
Strength	Very Weak
Accuracy	83.33%
Values	Daily Returns

Emerson Radio  vs.  DUKE ENERGY CAROLINAS

Emerson Radio

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Emerson Radio has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of very healthy basic indicators, Emerson Radio is not utilizing all of its potentials. The current stock price disarray, may contribute to short-term losses for the investors.

DUKE ENERGY CAROLINAS

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days DUKE ENERGY CAROLINAS has generated negative risk-adjusted returns adding no value to investors with long positions. Despite somewhat strong basic indicators, 26442CAM6 is not utilizing all of its potentials. The recent stock price disturbance, may contribute to short-term losses for the investors.

Pair Trading with Emerson Radio and 26442CAM6

The main advantage of trading using opposite Emerson Radio and 26442CAM6 positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Emerson Radio position performs unexpectedly, 26442CAM6 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 26442CAM6 will offset losses from the drop in 26442CAM6's long position.

The idea behind Emerson Radio and DUKE ENERGY CAROLINAS 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 Sync Your Broker module to sync your existing holdings, watchlists, positions or portfolios from thousands of online brokerage services, banks, investment account aggregators and robo-advisors..