Correlation Between EMCOR and DELHAIZE

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

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

Diversification Opportunities for EMCOR and DELHAIZE

0.04

Correlation Coefficient

EMCOR  DELHAIZE

Significant diversification

The 3 months correlation between EMCOR and DELHAIZE is 0.04. Overlapping area represents the amount of risk that can be diversified away by holding EMCOR Group and DELHAIZE GROUP SA in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on DELHAIZE GROUP SA 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 DELHAIZE. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of DELHAIZE GROUP SA has no effect on the direction of EMCOR i.e., EMCOR and DELHAIZE go up and down completely randomly.

Pair Corralation between EMCOR and DELHAIZE

Considering the 90-day investment horizon EMCOR Group is expected to under-perform the DELHAIZE. In addition to that, EMCOR is 3.36 times more volatile than DELHAIZE GROUP SA. It trades about -0.11 of its total potential returns per unit of risk. DELHAIZE GROUP SA is currently generating about -0.01 per unit of volatility. If you would invest  10,250  in DELHAIZE GROUP SA on December 4, 2024 and sell it today you would lose (26.00) from holding DELHAIZE GROUP SA or give up 0.25% of portfolio value over 90 days.

Time Period	3 Months [change]
Direction	Moves Together
Strength	Insignificant
Accuracy	42.37%
Values	Daily Returns

EMCOR Group  vs.  DELHAIZE GROUP SA

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 fragile performance in the last few months, the Stock's primary indicators remain rather sound which may send shares a bit higher in April 2025. The latest tumult may also be a sign of longer-term up-swing for the firm shareholders.

DELHAIZE GROUP SA

Risk-Adjusted Performance

Very Weak

Over the last 90 days DELHAIZE GROUP SA has generated negative risk-adjusted returns adding no value to investors with long positions. Despite somewhat strong basic indicators, DELHAIZE is not utilizing all of its potentials. The current stock price disturbance, may contribute to short-term losses for the investors.

Pair Trading with EMCOR and DELHAIZE

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

The idea behind EMCOR Group and DELHAIZE GROUP SA 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 Comparator module to compare the composition, asset allocations and performance of any two portfolios in your account.