Correlation Between VINCI SA and EMCOR

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

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

Diversification Opportunities for VINCI SA and EMCOR

-0.32

Correlation Coefficient

VINCI SA  EMCOR

Very good diversification

The 3 months correlation between VINCI and EMCOR is -0.32. Overlapping area represents the amount of risk that can be diversified away by holding VINCI SA and EMCOR Group in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on EMCOR Group and VINCI SA 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 VINCI 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 VINCI SA i.e., VINCI SA and EMCOR go up and down completely randomly.

Pair Corralation between VINCI SA and EMCOR

Assuming the 90 days horizon VINCI SA is expected to under-perform the EMCOR. In addition to that, VINCI SA is 1.28 times more volatile than EMCOR Group. It trades about -0.02 of its total potential returns per unit of risk. EMCOR Group is currently generating about 0.34 per unit of volatility. If you would invest  35,327  in EMCOR Group on September 5, 2024 and sell it today you would earn a total of  15,632  from holding EMCOR Group or generate 44.25% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Against
Strength	Insignificant
Accuracy	95.31%
Values	Daily Returns

VINCI SA  vs.  EMCOR Group

VINCI SA

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days VINCI SA has generated negative risk-adjusted returns adding no value to investors with long positions. Despite nearly stable basic indicators, VINCI SA is not utilizing all of its potentials. The current stock price disturbance, may contribute to mid-run losses for the stockholders.

EMCOR Group

Risk-Adjusted Performance

26 of 100

Strong

Compared to the overall equity markets, risk-adjusted returns on investments in EMCOR Group are ranked lower than 26 (%) of all global equities and portfolios over the last 90 days. In spite of rather fragile primary indicators, EMCOR exhibited solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with VINCI SA and EMCOR

The main advantage of trading using opposite VINCI SA and EMCOR positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if VINCI SA 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 VINCI 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 Volatility Analysis module to get historical volatility and risk analysis based on latest market data.