Correlation Between EMCOR and Wyndham

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

By analyzing existing cross correlation between EMCOR Group and Wyndham Destinations 45, you can compare the effects of market volatilities on EMCOR and Wyndham 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 Wyndham. Check out your portfolio center. Please also check ongoing floating volatility patterns of EMCOR and Wyndham.

Diversification Opportunities for EMCOR and Wyndham

0.59

Correlation Coefficient

EMCOR  Wyndham

Very weak diversification

The 3 months correlation between EMCOR and Wyndham is 0.59. Overlapping area represents the amount of risk that can be diversified away by holding EMCOR Group and Wyndham Destinations 45 in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Wyndham Destinations 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 Wyndham. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Wyndham Destinations has no effect on the direction of EMCOR i.e., EMCOR and Wyndham go up and down completely randomly.

Pair Corralation between EMCOR and Wyndham

Considering the 90-day investment horizon EMCOR Group is expected to generate 8.42 times more return on investment than Wyndham. However, EMCOR is 8.42 times more volatile than Wyndham Destinations 45. It trades about 0.16 of its potential returns per unit of risk. Wyndham Destinations 45 is currently generating about 0.04 per unit of risk. If you would invest  44,589  in EMCOR Group on October 24, 2024 and sell it today you would earn a total of  9,010  from holding EMCOR Group or generate 20.21% return on investment over 90 days.

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

EMCOR Group  vs.  Wyndham Destinations 45

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.

Wyndham Destinations

Risk-Adjusted Performance

3 of 100

Insignificant

Compared to the overall equity markets, risk-adjusted returns on investments in Wyndham Destinations 45 are ranked lower than 3 (%) of all global equities and portfolios over the last 90 days. Despite somewhat strong basic indicators, Wyndham is not utilizing all of its potentials. The newest stock price disturbance, may contribute to short-term losses for the investors.

Pair Trading with EMCOR and Wyndham

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

The idea behind EMCOR Group and Wyndham Destinations 45 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 Funds Screener module to find actively-traded funds from around the world traded on over 30 global exchanges.