Correlation Between Emerson Electric and Enerpac Tool

Specify exactly 2 symbols:
Can any of the company-specific risk be diversified away by investing in both Emerson Electric and Enerpac Tool 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 Electric and Enerpac Tool into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Emerson Electric and Enerpac Tool Group, you can compare the effects of market volatilities on Emerson Electric and Enerpac Tool 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 Electric with a short position of Enerpac Tool. Check out your portfolio center. Please also check ongoing floating volatility patterns of Emerson Electric and Enerpac Tool.

Diversification Opportunities for Emerson Electric and Enerpac Tool

0.8
  Correlation Coefficient

Very poor diversification

The 3 months correlation between Emerson and Enerpac is 0.8. Overlapping area represents the amount of risk that can be diversified away by holding Emerson Electric and Enerpac Tool Group in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Enerpac Tool Group and Emerson Electric 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 Electric are associated (or correlated) with Enerpac Tool. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Enerpac Tool Group has no effect on the direction of Emerson Electric i.e., Emerson Electric and Enerpac Tool go up and down completely randomly.

Pair Corralation between Emerson Electric and Enerpac Tool

Considering the 90-day investment horizon Emerson Electric is expected to generate 0.98 times more return on investment than Enerpac Tool. However, Emerson Electric is 1.02 times less risky than Enerpac Tool. It trades about 0.33 of its potential returns per unit of risk. Enerpac Tool Group is currently generating about -0.06 per unit of risk. If you would invest  8,535  in Emerson Electric on September 2, 2022 and sell it today you would earn a total of  1,023  from holding Emerson Electric or generate 11.99% return on investment over 90 days.
Time Period3 Months [change]
DirectionMoves Together 
StrengthStrong
Accuracy100.0%
ValuesDaily Returns

Emerson Electric  vs.  Enerpac Tool Group

 Performance (%) 
       Timeline  
Emerson Electric 
Emerson Performance
10 of 100
Compared to the overall equity markets, risk-adjusted returns on investments in Emerson Electric are ranked lower than 10 (%) of all global equities and portfolios over the last 90 days. Even with relatively unsteady primary indicators, Emerson Electric reported solid returns over the last few months and may actually be approaching a breakup point.

Emerson Price Channel

Enerpac Tool Group 
Enerpac Performance
15 of 100
Compared to the overall equity markets, risk-adjusted returns on investments in Enerpac Tool Group are ranked lower than 15 (%) of all global equities and portfolios over the last 90 days. Despite somewhat unsteady basic indicators, Enerpac Tool sustained solid returns over the last few months and may actually be approaching a breakup point.

Enerpac Price Channel

Emerson Electric and Enerpac Tool Volatility Contrast

   Predicted Return Density   
       Returns  

Pair Trading with Emerson Electric and Enerpac Tool

The main advantage of trading using opposite Emerson Electric and Enerpac Tool positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Emerson Electric position performs unexpectedly, Enerpac Tool 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 Enerpac Tool will offset losses from the drop in Enerpac Tool's long position.
Emerson Electric vs. Home Depot
Emerson Electric vs. Johnson Johnson
Emerson Electric vs. Dupont De Nemours
Emerson Electric vs. Intel
The idea behind Emerson Electric and Enerpac Tool Group 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.
Enerpac Tool vs. General Electric
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 Equity Valuation module to check real value of public entities based on technical and fundamental data.

Other Complementary Tools

Portfolio Backtesting
Avoid under-diversification and over-optimization by backtesting your portfolios
Go
Financial Widgets
Easily integrated Macroaxis content with over 30 different plug-and-play financial widgets
Go
Bond Directory
Find actively traded corporate debentures issued by US companies
Go
Analyst Recommendations
Analyst recommendations and target price estimates broken down by several categories
Go
Equity Forecasting
Use basic forecasting models to generate price predictions and determine price momentum
Go
Money Flow Index
Determine momentum by analyzing Money Flow Index and other technical indicators
Go
Global Markets Map
Get a quick overview of global market snapshot using zoomable world map. Drill down to check world indexes
Go
Idea Analyzer
Analyze all characteristics, volatility and risk-adjusted return of Macroaxis ideas
Go
Alpha Finder
Use alpha and beta coefficients to find investment opportunities after accounting for the risk
Go
Portfolio Diagnostics
Use generated alerts and portfolio events aggregator to diagnose current holdings
Go