Correlation Between 493267AK4 and EMCOR

Can any of the company-specific risk be diversified away by investing in both 493267AK4 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 493267AK4 and EMCOR into the same portfolio, which is an essential part of the fundamental portfolio management process.

By analyzing existing cross correlation between KEY 5 and EMCOR Group, you can compare the effects of market volatilities on 493267AK4 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 493267AK4 with a short position of EMCOR. Check out your portfolio center. Please also check ongoing floating volatility patterns of 493267AK4 and EMCOR.

Diversification Opportunities for 493267AK4 and EMCOR

-0.18

Correlation Coefficient

493267AK4  EMCOR

Good diversification

The 3 months correlation between 493267AK4 and EMCOR is -0.18. Overlapping area represents the amount of risk that can be diversified away by holding KEY 5 and EMCOR Group in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on EMCOR Group and 493267AK4 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 KEY 5 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 493267AK4 i.e., 493267AK4 and EMCOR go up and down completely randomly.

Pair Corralation between 493267AK4 and EMCOR

Assuming the 90 days trading horizon KEY 5 is expected to under-perform the EMCOR. But the bond apears to be less risky and, when comparing its historical volatility, KEY 5 is 1.05 times less risky than EMCOR. The bond trades about -0.07 of its potential returns per unit of risk. The EMCOR Group is currently generating about 0.07 of returns per unit of risk over similar time horizon. If you would invest  43,487  in EMCOR Group on September 21, 2024 and sell it today you would earn a total of  3,095  from holding EMCOR Group or generate 7.12% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Against
Strength	Insignificant
Accuracy	96.88%
Values	Daily Returns

KEY 5  vs.  EMCOR Group

493267AK4

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days KEY 5 has generated negative risk-adjusted returns adding no value to investors with long positions. Despite latest fragile performance, the Bond's basic indicators remain strong and the current disturbance on Wall Street may also be a sign of long term gains for KEY 5 investors.

EMCOR Group

Risk-Adjusted Performance

5 of 100

Modest

Compared to the overall equity markets, risk-adjusted returns on investments in EMCOR Group are ranked lower than 5 (%) of all global equities and portfolios over the last 90 days. In spite of rather unsteady primary indicators, EMCOR may actually be approaching a critical reversion point that can send shares even higher in January 2025.

Pair Trading with 493267AK4 and EMCOR

The main advantage of trading using opposite 493267AK4 and EMCOR positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if 493267AK4 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 KEY 5 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 Idea Optimizer module to use advanced portfolio builder with pre-computed micro ideas to build optimal portfolio .