Correlation Between EMCOR and Ameresco
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
Very good diversification
The 3 months correlation between EMCOR and Ameresco is -0.34. 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 0.49 times more return on investment than Ameresco. However, EMCOR Group is 2.04 times less risky than Ameresco. It trades about 0.1 of its potential returns per unit of risk. Ameresco is currently generating about -0.03 per unit of risk. If you would invest 39,511 in EMCOR Group on August 28, 2024 and sell it today you would earn a total of 11,588 from holding EMCOR Group or generate 29.33% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Insignificant |
| Accuracy | 100.0% |
| Values | Daily Returns |
EMCOR Group vs. Ameresco
Performance |
| Timeline |
| EMCOR Group |
| Ameresco |
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.| Ameresco vs. TPI Composites | Ameresco vs. Hannon Armstrong Sustainable | Ameresco vs. Atkore International Group | Ameresco vs. Daqo New Energy |
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 Portfolio Rebalancing module to analyze risk-adjusted returns against different time horizons to find asset-allocation targets.
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