Correlation Between EMCOR and HollyFrontier

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

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

Diversification Opportunities for EMCOR and HollyFrontier

0.0

Correlation Coefficient

EMCOR  HollyFrontier

Pay attention - limited upside

The 3 months correlation between EMCOR and HollyFrontier is 0.0. Overlapping area represents the amount of risk that can be diversified away by holding EMCOR Group and HollyFrontier in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on HollyFrontier 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 HollyFrontier. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of HollyFrontier has no effect on the direction of EMCOR i.e., EMCOR and HollyFrontier go up and down completely randomly.

Pair Corralation between EMCOR and HollyFrontier

If you would invest  15,084  in EMCOR Group on October 3, 2024 and sell it today you would earn a total of  30,306  from holding EMCOR Group or generate 200.91% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Flat
Strength	Insignificant
Accuracy	0.0%
Values	Daily Returns

EMCOR Group  vs.  HollyFrontier

EMCOR Group

Risk-Adjusted Performance

4 of 100

Insignificant

Compared to the overall equity markets, risk-adjusted returns on investments in EMCOR Group are ranked lower than 4 (%) of all global equities and portfolios over the last 90 days. In spite of rather unsteady primary indicators, EMCOR may actually be approaching a critical reversion point that can send shares even higher in February 2025.

HollyFrontier

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days HollyFrontier has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of rather sound technical and fundamental indicators, HollyFrontier is not utilizing all of its potentials. The latest stock price tumult, may contribute to shorter-term losses for the shareholders.

Pair Trading with EMCOR and HollyFrontier

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

The idea behind EMCOR Group and HollyFrontier 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 Portfolio Backtesting module to avoid under-diversification and over-optimization by backtesting your portfolios.