Correlation Between Emerson Electric and Chart Industries

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

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

Diversification Opportunities for Emerson Electric and Chart Industries

-0.21

Correlation Coefficient

Emerson Electric  Chart Industries

Very good diversification

The 3 months correlation between Emerson and Chart is -0.21. Overlapping area represents the amount of risk that can be diversified away by holding Emerson Electric and Chart Industries in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Chart Industries 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 Chart Industries. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Chart Industries has no effect on the direction of Emerson Electric i.e., Emerson Electric and Chart Industries go up and down completely randomly.

Pair Corralation between Emerson Electric and Chart Industries

Considering the 90-day investment horizon Emerson Electric is expected to generate 8.69 times more return on investment than Chart Industries. However, Emerson Electric is 8.69 times more volatile than Chart Industries. It trades about 0.0 of its potential returns per unit of risk. Chart Industries is currently generating about 0.03 per unit of risk. If you would invest  14,002  in Emerson Electric on August 5, 2025 and sell it today you would lose (45.00) from holding Emerson Electric or give up 0.32% of portfolio value over 90 days.

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

Emerson Electric  vs.  Chart Industries

Emerson Electric

Risk-Adjusted Performance

Weakest

Over the last 90 days Emerson Electric has generated negative risk-adjusted returns adding no value to investors with long positions. Even with relatively invariable primary indicators, Emerson Electric is not utilizing all of its potentials. The latest stock price agitation, may contribute to short-term losses for the retail investors.

Chart Industries

Risk-Adjusted Performance

Soft

Compared to the overall equity markets, risk-adjusted returns on investments in Chart Industries are ranked lower than 2 (%) of all global equities and portfolios over the last 90 days. In spite of comparatively stable essential indicators, Chart Industries is not utilizing all of its potentials. The newest stock price uproar, may contribute to short-horizon losses for the private investors.

Pair Trading with Emerson Electric and Chart Industries

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

The idea behind Emerson Electric and Chart Industries 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 Portfolio Suggestion module to get suggestions outside of your existing asset allocation including your own model portfolios.