Correlation Between EMCOR and Aequi Acquisition

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

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

Diversification Opportunities for EMCOR and Aequi Acquisition

-0.15

Correlation Coefficient

EMCOR  Aequi Acquisition

Good diversification

The 3 months correlation between EMCOR and Aequi is -0.15. Overlapping area represents the amount of risk that can be diversified away by holding EMCOR Group and Aequi Acquisition Corp in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Aequi Acquisition Corp and EMCOR 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 EMCOR Group are associated (or correlated) with Aequi Acquisition. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Aequi Acquisition Corp has no effect on the direction of EMCOR i.e., EMCOR and Aequi Acquisition go up and down completely randomly.

Pair Corralation between EMCOR and Aequi Acquisition

If you would invest  45,235  in EMCOR Group on October 14, 2024 and sell it today you would earn a total of  1,469  from holding EMCOR Group or generate 3.25% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Against
Strength	Insignificant
Accuracy	1.61%
Values	Daily Returns

EMCOR Group  vs.  Aequi Acquisition Corp

EMCOR Group

Risk-Adjusted Performance

2 of 100

Weak

Compared to the overall equity markets, risk-adjusted returns on investments in EMCOR Group are ranked lower than 2 (%) of all global equities and portfolios over the last 90 days. In spite of rather sound primary indicators, EMCOR is not utilizing all of its potentials. The current stock price tumult, may contribute to shorter-term losses for the shareholders.

Aequi Acquisition Corp

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Aequi Acquisition Corp has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of comparatively stable technical and fundamental indicators, Aequi Acquisition is not utilizing all of its potentials. The recent stock price uproar, may contribute to short-horizon losses for the private investors.

Pair Trading with EMCOR and Aequi Acquisition

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

The idea behind EMCOR Group and Aequi Acquisition Corp 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.

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 Sectors module to list of equity sectors categorizing publicly traded companies based on their primary business activities.