Correlation Between EMCOR and Visteon Corp

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

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

Diversification Opportunities for EMCOR and Visteon Corp

0.22

Correlation Coefficient

EMCOR  Visteon Corp

Modest diversification

The 3 months correlation between EMCOR and Visteon is 0.22. Overlapping area represents the amount of risk that can be diversified away by holding EMCOR Group and Visteon Corp in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Visteon Corp 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 Visteon Corp. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Visteon Corp has no effect on the direction of EMCOR i.e., EMCOR and Visteon Corp go up and down completely randomly.

Pair Corralation between EMCOR and Visteon Corp

Considering the 90-day investment horizon EMCOR Group is expected to generate 0.94 times more return on investment than Visteon Corp. However, EMCOR Group is 1.06 times less risky than Visteon Corp. It trades about 0.14 of its potential returns per unit of risk. Visteon Corp is currently generating about -0.05 per unit of risk. If you would invest  14,449  in EMCOR Group on October 11, 2024 and sell it today you would earn a total of  33,137  from holding EMCOR Group or generate 229.34% return on investment over 90 days.

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

EMCOR Group  vs.  Visteon Corp

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 fragile primary indicators, EMCOR may actually be approaching a critical reversion point that can send shares even higher in February 2025.

Visteon Corp

Risk-Adjusted Performance

0 of 100

Very Weak

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

Pair Trading with EMCOR and Visteon Corp

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

The idea behind EMCOR Group and Visteon Corp 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 Commodity Directory module to find actively traded commodities issued by global exchanges.