Correlation Between EMCOR and Brenmiller Energy

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

By analyzing existing cross correlation between EMCOR Group and Brenmiller Energy Ltd, you can compare the effects of market volatilities on EMCOR and Brenmiller Energy 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 Brenmiller Energy. Check out your portfolio center. Please also check ongoing floating volatility patterns of EMCOR and Brenmiller Energy.

Diversification Opportunities for EMCOR and Brenmiller Energy

-0.67

Correlation Coefficient

EMCOR  Brenmiller Energy

Excellent diversification

The 3 months correlation between EMCOR and Brenmiller is -0.67. Overlapping area represents the amount of risk that can be diversified away by holding EMCOR Group and Brenmiller Energy Ltd in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Brenmiller Energy 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 Brenmiller Energy. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Brenmiller Energy has no effect on the direction of EMCOR i.e., EMCOR and Brenmiller Energy go up and down completely randomly.

Pair Corralation between EMCOR and Brenmiller Energy

Considering the 90-day investment horizon EMCOR Group is expected to generate 0.46 times more return on investment than Brenmiller Energy. However, EMCOR Group is 2.2 times less risky than Brenmiller Energy. It trades about 0.16 of its potential returns per unit of risk. Brenmiller Energy Ltd is currently generating about -0.1 per unit of risk. If you would invest  40,852  in EMCOR Group on September 18, 2024 and sell it today you would earn a total of  7,603  from holding EMCOR Group or generate 18.61% return on investment over 90 days.

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

EMCOR Group  vs.  Brenmiller Energy Ltd

EMCOR Group

Risk-Adjusted Performance

12 of 100

Good

Compared to the overall equity markets, risk-adjusted returns on investments in EMCOR Group are ranked lower than 12 (%) of all global equities and portfolios over the last 90 days. In spite of rather fragile primary indicators, EMCOR exhibited solid returns over the last few months and may actually be approaching a breakup point.

Brenmiller Energy

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Brenmiller Energy Ltd has generated negative risk-adjusted returns adding no value to investors with long positions. Despite abnormal performance in the last few months, the Stock's basic indicators remain nearly stable which may send shares a bit higher in January 2025. The current disturbance may also be a sign of long-run up-swing for the company stockholders.

Pair Trading with EMCOR and Brenmiller Energy

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

The idea behind EMCOR Group and Brenmiller Energy Ltd 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 Diagnostics module to use generated alerts and portfolio events aggregator to diagnose current holdings.