Correlation Between Howmet Aerospace and Emerson Electric
Can any of the company-specific risk be diversified away by investing in both Howmet Aerospace 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 Howmet Aerospace and Emerson Electric into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Howmet Aerospace and Emerson Electric, you can compare the effects of market volatilities on Howmet Aerospace 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 Howmet Aerospace with a short position of Emerson Electric. Check out your portfolio center. Please also check ongoing floating volatility patterns of Howmet Aerospace and Emerson Electric.
Diversification Opportunities for Howmet Aerospace and Emerson Electric
0.04 | Correlation Coefficient |
Significant diversification
The 3 months correlation between Howmet and Emerson is 0.04. Overlapping area represents the amount of risk that can be diversified away by holding Howmet Aerospace and Emerson Electric in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Emerson Electric and Howmet Aerospace 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 Howmet Aerospace 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 Howmet Aerospace i.e., Howmet Aerospace and Emerson Electric go up and down completely randomly.
Pair Corralation between Howmet Aerospace and Emerson Electric
Considering the 90-day investment horizon Howmet Aerospace is expected to generate 0.63 times more return on investment than Emerson Electric. However, Howmet Aerospace is 1.58 times less risky than Emerson Electric. It trades about -0.11 of its potential returns per unit of risk. Emerson Electric is currently generating about -0.11 per unit of risk. If you would invest 20,662 in Howmet Aerospace on September 2, 2025 and sell it today you would lose (547.00) from holding Howmet Aerospace or give up 2.65% of portfolio value over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Insignificant |
| Accuracy | 100.0% |
| Values | Daily Returns |
Howmet Aerospace vs. Emerson Electric
Performance |
| Timeline |
| Howmet Aerospace |
| Emerson Electric |
Howmet Aerospace and Emerson Electric Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Howmet Aerospace and Emerson Electric
The main advantage of trading using opposite Howmet Aerospace and Emerson Electric positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Howmet Aerospace 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.| Howmet Aerospace vs. BG Foods | Howmet Aerospace vs. Ausnutria Dairy | Howmet Aerospace vs. Genufood Energy | Howmet Aerospace vs. Sligro Food Group |
| Emerson Electric vs. Trio Tech International | Emerson Electric vs. Paiute Oil Mining | Emerson Electric vs. Orbite Technologies | Emerson Electric vs. Uber Technologies |
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 Idea Breakdown module to analyze constituents of all Macroaxis ideas. Macroaxis investment ideas are predefined, sector-focused investing themes.
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