Correlation Between Emerson Radio and Stagwell

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

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

Diversification Opportunities for Emerson Radio and Stagwell

-0.68

Correlation Coefficient

Emerson Radio  Stagwell

Excellent diversification

The 3 months correlation between Emerson and Stagwell is -0.68. Overlapping area represents the amount of risk that can be diversified away by holding Emerson Radio and Stagwell in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Stagwell 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 Stagwell. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Stagwell has no effect on the direction of Emerson Radio i.e., Emerson Radio and Stagwell go up and down completely randomly.

Pair Corralation between Emerson Radio and Stagwell

Considering the 90-day investment horizon Emerson Radio is expected to under-perform the Stagwell. In addition to that, Emerson Radio is 1.42 times more volatile than Stagwell. It trades about -0.04 of its total potential returns per unit of risk. Stagwell is currently generating about 0.02 per unit of volatility. If you would invest  725.00  in Stagwell on September 15, 2024 and sell it today you would earn a total of  4.00  from holding Stagwell or generate 0.55% return on investment over 90 days.

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

Emerson Radio  vs.  Stagwell

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 latest conflicting performance, the Stock's basic indicators remain healthy and the recent disarray on Wall Street may also be a sign of long period gains for the firm investors.

Stagwell

Risk-Adjusted Performance

1 of 100

Weak

Compared to the overall equity markets, risk-adjusted returns on investments in Stagwell are ranked lower than 1 (%) of all global equities and portfolios over the last 90 days. In spite of fairly stable technical and fundamental indicators, Stagwell is not utilizing all of its potentials. The latest stock price fuss, may contribute to near-short-term losses for the sophisticated investors.

Pair Trading with Emerson Radio and Stagwell

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

The idea behind Emerson Radio and Stagwell 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 Insider Screener module to find insiders across different sectors to evaluate their impact on performance.