Correlation Between MasTec and EMCOR

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

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

Diversification Opportunities for MasTec and EMCOR

0.84

Correlation Coefficient

MasTec  EMCOR

Very poor diversification

The 3 months correlation between MasTec and EMCOR is 0.84. Overlapping area represents the amount of risk that can be diversified away by holding MasTec Inc and EMCOR Group in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on EMCOR Group and MasTec 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 MasTec Inc are associated (or correlated) with EMCOR. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of EMCOR Group has no effect on the direction of MasTec i.e., MasTec and EMCOR go up and down completely randomly.

Pair Corralation between MasTec and EMCOR

Considering the 90-day investment horizon MasTec Inc is expected to generate 1.05 times more return on investment than EMCOR. However, MasTec is 1.05 times more volatile than EMCOR Group. It trades about -0.03 of its potential returns per unit of risk. EMCOR Group is currently generating about -0.07 per unit of risk. If you would invest  13,580  in MasTec Inc on December 28, 2024 and sell it today you would lose (1,308) from holding MasTec Inc or give up 9.63% of portfolio value over 90 days.

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

MasTec Inc  vs.  EMCOR Group

MasTec Inc

Risk-Adjusted Performance

Very Weak

Over the last 90 days MasTec Inc has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of fairly strong basic indicators, MasTec is not utilizing all of its potentials. The latest stock price disturbance, may contribute to short-term losses for the investors.

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.

Pair Trading with MasTec and EMCOR

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

The idea behind MasTec Inc and EMCOR Group 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 Earnings Calls module to check upcoming earnings announcements updated hourly across public exchanges.