Correlation Between EMCOR and Ameresco

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Can any of the company-specific risk be diversified away by investing in both EMCOR and Ameresco 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 EMCOR and Ameresco into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between EMCOR Group and Ameresco, you can compare the effects of market volatilities on EMCOR and Ameresco 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 EMCOR with a short position of Ameresco. Check out your portfolio center. Please also check ongoing floating volatility patterns of EMCOR and Ameresco.

Diversification Opportunities for EMCOR and Ameresco

-0.3
  Correlation Coefficient

Very good diversification

The 3 months correlation between EMCOR and Ameresco is -0.3. Overlapping area represents the amount of risk that can be diversified away by holding EMCOR Group and Ameresco in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Ameresco and EMCOR 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 EMCOR Group are associated (or correlated) with Ameresco. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Ameresco has no effect on the direction of EMCOR i.e., EMCOR and Ameresco go up and down completely randomly.

Pair Corralation between EMCOR and Ameresco

Considering the 90-day investment horizon EMCOR Group is expected to generate 0.43 times more return on investment than Ameresco. However, EMCOR Group is 2.34 times less risky than Ameresco. It trades about 0.25 of its potential returns per unit of risk. Ameresco is currently generating about 0.06 per unit of risk. If you would invest  46,559  in EMCOR Group on October 21, 2024 and sell it today you would earn a total of  4,088  from holding EMCOR Group or generate 8.78% return on investment over 90 days.
Time Period3 Months [change]
DirectionMoves Against 
StrengthInsignificant
Accuracy100.0%
ValuesDaily Returns

EMCOR Group  vs.  Ameresco

 Performance 
       Timeline  
EMCOR Group 

Risk-Adjusted Performance

7 of 100

 
Weak
 
Strong
OK
Compared to the overall equity markets, risk-adjusted returns on investments in EMCOR Group are ranked lower than 7 (%) of all global equities and portfolios over the last 90 days. In spite of rather fragile primary indicators, EMCOR may actually be approaching a critical reversion point that can send shares even higher in February 2025.
Ameresco 

Risk-Adjusted Performance

0 of 100

 
Weak
 
Strong
Very Weak
Over the last 90 days Ameresco has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of unsteady performance in the last few months, the Stock's basic indicators remain rather sound which may send shares a bit higher in February 2025. The latest tumult may also be a sign of longer-term up-swing for the firm shareholders.

EMCOR and Ameresco Volatility Contrast

   Predicted Return Density   
       Returns  

Pair Trading with EMCOR and Ameresco

The main advantage of trading using opposite EMCOR and Ameresco positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if EMCOR position performs unexpectedly, Ameresco 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 Ameresco will offset losses from the drop in Ameresco's long position.
The idea behind EMCOR Group and Ameresco 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 Aroon Oscillator module to analyze current equity momentum using Aroon Oscillator and other momentum ratios.

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