Correlation Between Southland Holdings and EMCOR
Can any of the company-specific risk be diversified away by investing in both Southland Holdings 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 Southland Holdings and EMCOR into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Southland Holdings and EMCOR Group, you can compare the effects of market volatilities on Southland Holdings 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 Southland Holdings with a short position of EMCOR. Check out your portfolio center. Please also check ongoing floating volatility patterns of Southland Holdings and EMCOR.
Diversification Opportunities for Southland Holdings and EMCOR
0.27 | Correlation Coefficient |
Modest diversification
The 3 months correlation between Southland and EMCOR is 0.27. Overlapping area represents the amount of risk that can be diversified away by holding Southland Holdings and EMCOR Group in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on EMCOR Group and Southland Holdings 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 Southland Holdings 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 Southland Holdings i.e., Southland Holdings and EMCOR go up and down completely randomly.
Pair Corralation between Southland Holdings and EMCOR
Given the investment horizon of 90 days Southland Holdings is expected to generate 0.95 times more return on investment than EMCOR. However, Southland Holdings is 1.06 times less risky than EMCOR. It trades about -0.03 of its potential returns per unit of risk. EMCOR Group is currently generating about -0.08 per unit of risk. If you would invest 349.00 in Southland Holdings on December 28, 2024 and sell it today you would lose (29.00) from holding Southland Holdings or give up 8.31% of portfolio value over 90 days.
Time Period | 3 Months [change] |
Direction | Moves Together |
Strength | Very Weak |
Accuracy | 98.36% |
Values | Daily Returns |
Southland Holdings vs. EMCOR Group
Performance |
Timeline |
Southland Holdings |
EMCOR Group |
Southland Holdings and EMCOR Volatility Contrast
Predicted Return Density |
Returns |
Pair Trading with Southland Holdings and EMCOR
The main advantage of trading using opposite Southland Holdings and EMCOR positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Southland Holdings 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.Southland Holdings vs. Sun Country Airlines | Southland Holdings vs. Asbury Automotive Group | Southland Holdings vs. Eastman Kodak Co | Southland Holdings vs. Tradeweb Markets |
Check out your portfolio center.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 Economic Indicators module to top statistical indicators that provide insights into how an economy is performing.
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