Correlation Between EMCOR and CENTENE

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

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

Diversification Opportunities for EMCOR and CENTENE

-0.31

Correlation Coefficient

EMCOR  CENTENE

Very good diversification

The 3 months correlation between EMCOR and CENTENE is -0.31. Overlapping area represents the amount of risk that can be diversified away by holding EMCOR Group and CENTENE P DEL in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on CENTENE P DEL 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 CENTENE. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of CENTENE P DEL has no effect on the direction of EMCOR i.e., EMCOR and CENTENE go up and down completely randomly.

Pair Corralation between EMCOR and CENTENE

Considering the 90-day investment horizon EMCOR Group is expected to under-perform the CENTENE. In addition to that, EMCOR is 2.72 times more volatile than CENTENE P DEL. It trades about -0.06 of its total potential returns per unit of risk. CENTENE P DEL is currently generating about -0.1 per unit of volatility. If you would invest  8,599  in CENTENE P DEL on December 22, 2024 and sell it today you would lose (665.00) from holding CENTENE P DEL or give up 7.73% of portfolio value over 90 days.

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

EMCOR Group  vs.  CENTENE P DEL

EMCOR Group

Risk-Adjusted Performance

Very Weak

Over the last 90 days EMCOR Group has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of latest fragile performance, the Stock's primary indicators remain sound and the latest tumult on Wall Street may also be a sign of longer-term gains for the firm shareholders.

CENTENE P DEL

Risk-Adjusted Performance

Very Weak

Over the last 90 days CENTENE P DEL has generated negative risk-adjusted returns adding no value to investors with long positions. Despite latest uncertain performance, the Bond's basic indicators remain strong and the current disturbance on Wall Street may also be a sign of long term gains for CENTENE P DEL investors.

Pair Trading with EMCOR and CENTENE

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

The idea behind EMCOR Group and CENTENE P DEL 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 Volatility Analysis module to get historical volatility and risk analysis based on latest market data.