Correlation Between Vestas Wind and Emerson Electric
Can any of the company-specific risk be diversified away by investing in both Vestas Wind 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 Vestas Wind and Emerson Electric into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Vestas Wind Systems and Emerson Electric, you can compare the effects of market volatilities on Vestas Wind 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 Vestas Wind with a short position of Emerson Electric. Check out your portfolio center. Please also check ongoing floating volatility patterns of Vestas Wind and Emerson Electric.
Diversification Opportunities for Vestas Wind and Emerson Electric
-0.31 | Correlation Coefficient |
Very good diversification
The 3 months correlation between Vestas and Emerson is -0.31. Overlapping area represents the amount of risk that can be diversified away by holding Vestas Wind Systems and Emerson Electric in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Emerson Electric and Vestas Wind 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 Vestas Wind Systems 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 Vestas Wind i.e., Vestas Wind and Emerson Electric go up and down completely randomly.
Pair Corralation between Vestas Wind and Emerson Electric
Assuming the 90 days horizon Vestas Wind Systems is expected to under-perform the Emerson Electric. In addition to that, Vestas Wind is 2.51 times more volatile than Emerson Electric. It trades about -0.38 of its total potential returns per unit of risk. Emerson Electric is currently generating about -0.17 per unit of volatility. If you would invest 11,202 in Emerson Electric on January 20, 2024 and sell it today you would lose (271.00) from holding Emerson Electric or give up 2.42% of portfolio value over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Insignificant |
| Accuracy | 91.3% |
| Values | Daily Returns |
Vestas Wind Systems vs. Emerson Electric
Performance |
| Timeline |
| Vestas Wind Systems |
| Emerson Electric |
Vestas Wind and Emerson Electric Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Vestas Wind and Emerson Electric
The main advantage of trading using opposite Vestas Wind and Emerson Electric positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Vestas Wind 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.| Vestas Wind vs. GE Aerospace | Vestas Wind vs. Eaton PLC | Vestas Wind vs. Illinois Tool Works | Vestas Wind vs. Parker Hannifin |
| Emerson Electric vs. Dover | Emerson Electric vs. Parker Hannifin | Emerson Electric vs. Pentair PLC | Emerson Electric vs. Illinois Tool Works |
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 Headlines Timeline module to stay connected to all market stories and filter out noise. Drill down to analyze hype elasticity.
Other Complementary Tools
| Investing Opportunities Build portfolios using our predefined set of ideas and optimize them against your investing preferences | |
| AI Portfolio Architect Use AI to generate optimal portfolios and find profitable investment opportunities | |
| Pair Correlation Compare performance and examine fundamental relationship between any two equity instruments | |
| Portfolio Volatility Check portfolio volatility and analyze historical return density to properly model market risk | |
| Idea Breakdown Analyze constituents of all Macroaxis ideas. Macroaxis investment ideas are predefined, sector-focused investing themes | |
| Commodity Channel Use Commodity Channel Index to analyze current equity momentum | |
| Crypto Correlations Use cryptocurrency correlation module to diversify your cryptocurrency portfolio across multiple coins | |
| Positions Ratings Determine portfolio positions ratings based on digital equity recommendations. Macroaxis instant position ratings are based on combination of fundamental analysis and risk-adjusted market performance | |
| Cryptocurrency Center Build and monitor diversified portfolio of extremely risky digital assets and cryptocurrency | |
| Watchlist Optimization Optimize watchlists to build efficient portfolios or rebalance existing positions based on the mean-variance optimization algorithm | |
| Portfolio Analyzer Portfolio analysis module that provides access to portfolio diagnostics and optimization engine |