Correlation Between DELHAIZE and EMCOR

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

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

Diversification Opportunities for DELHAIZE and EMCOR

0.04

Correlation Coefficient

DELHAIZE  EMCOR

Significant diversification

The 3 months correlation between DELHAIZE and EMCOR is 0.04. Overlapping area represents the amount of risk that can be diversified away by holding DELHAIZE GROUP SA and EMCOR Group in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on EMCOR Group and DELHAIZE 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 DELHAIZE GROUP SA 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 DELHAIZE i.e., DELHAIZE and EMCOR go up and down completely randomly.

Pair Corralation between DELHAIZE and EMCOR

Assuming the 90 days trading horizon DELHAIZE GROUP SA is expected to generate 0.33 times more return on investment than EMCOR. However, DELHAIZE GROUP SA is 3.02 times less risky than EMCOR. It trades about 0.15 of its potential returns per unit of risk. EMCOR Group is currently generating about -0.21 per unit of risk. If you would invest  10,062  in DELHAIZE GROUP SA on December 4, 2024 and sell it today you would earn a total of  162.00  from holding DELHAIZE GROUP SA or generate 1.61% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Together
Strength	Insignificant
Accuracy	60.0%
Values	Daily Returns

DELHAIZE GROUP SA  vs.  EMCOR Group

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.

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 DELHAIZE and EMCOR

The main advantage of trading using opposite DELHAIZE and EMCOR positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if DELHAIZE 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 DELHAIZE GROUP SA 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 Equity Forecasting module to use basic forecasting models to generate price predictions and determine price momentum.