Correlation Between Insperity and Emerson Electric

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

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

Diversification Opportunities for Insperity and Emerson Electric

-0.68

Correlation Coefficient

Insperity  Emerson Electric

Excellent diversification

The 3 months correlation between Insperity and Emerson is -0.68. Overlapping area represents the amount of risk that can be diversified away by holding Insperity and Emerson Electric in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Emerson Electric and Insperity 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 Insperity 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 Insperity i.e., Insperity and Emerson Electric go up and down completely randomly.

Pair Corralation between Insperity and Emerson Electric

Considering the 90-day investment horizon Insperity is expected to under-perform the Emerson Electric. In addition to that, Insperity is 2.52 times more volatile than Emerson Electric. It trades about -0.15 of its total potential returns per unit of risk. Emerson Electric is currently generating about 0.34 per unit of volatility. If you would invest  10,680  in Emerson Electric on May 6, 2025 and sell it today you would earn a total of  3,498  from holding Emerson Electric or generate 32.75% return on investment over 90 days.

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

Insperity  vs.  Emerson Electric

Insperity

Risk-Adjusted Performance

Very Weak

Over the last 90 days Insperity has generated negative risk-adjusted returns adding no value to investors with long positions. Even with weak performance in the last few months, the Stock's basic indicators remain relatively invariable which may send shares a bit higher in September 2025. The latest agitation may also be a sign of long-running up-swing for the enterprise retail investors.

Emerson Electric

Risk-Adjusted Performance

Solid

Compared to the overall equity markets, risk-adjusted returns on investments in Emerson Electric are ranked lower than 26 (%) 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.

Pair Trading with Insperity and Emerson Electric

The main advantage of trading using opposite Insperity and Emerson Electric positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Insperity 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.

The idea behind Insperity and Emerson Electric 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 Correlation Analysis module to reduce portfolio risk simply by holding instruments which are not perfectly correlated.