Correlation Between Emerson Radio and Greif Bros

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

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

Diversification Opportunities for Emerson Radio and Greif Bros

0.42

Correlation Coefficient

Emerson Radio  Greif Bros

Very weak diversification

The 3 months correlation between Emerson and Greif is 0.42. Overlapping area represents the amount of risk that can be diversified away by holding Emerson Radio and Greif Bros in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Greif Bros 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 Greif Bros. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Greif Bros has no effect on the direction of Emerson Radio i.e., Emerson Radio and Greif Bros go up and down completely randomly.

Pair Corralation between Emerson Radio and Greif Bros

Considering the 90-day investment horizon Emerson Radio is expected to generate 1.16 times less return on investment than Greif Bros. In addition to that, Emerson Radio is 1.86 times more volatile than Greif Bros. It trades about 0.0 of its total potential returns per unit of risk. Greif Bros is currently generating about 0.01 per unit of volatility. If you would invest  6,708  in Greif Bros on August 19, 2024 and sell it today you would earn a total of  71.00  from holding Greif Bros or generate 1.06% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Together
Strength	Weak
Accuracy	100.0%
Values	Daily Returns

Emerson Radio  vs.  Greif Bros

Emerson Radio

Risk-Adjusted Performance

2 of 100

Weak

Compared to the overall equity markets, risk-adjusted returns on investments in Emerson Radio are ranked lower than 2 (%) of all global equities and portfolios over the last 90 days. 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.

Greif Bros

Risk-Adjusted Performance

8 of 100

OK

Compared to the overall equity markets, risk-adjusted returns on investments in Greif Bros are ranked lower than 8 (%) of all global equities and portfolios over the last 90 days. Despite nearly unfluctuating technical and fundamental indicators, Greif Bros may actually be approaching a critical reversion point that can send shares even higher in December 2024.

Pair Trading with Emerson Radio and Greif Bros

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

The idea behind Emerson Radio and Greif Bros 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 Equity Analysis module to research over 250,000 global equities including funds, stocks and ETFs to find investment opportunities.