Correlation Between EMCOR and Grupo Aeroportuario
Can any of the company-specific risk be diversified away by investing in both EMCOR and Grupo Aeroportuario 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 Grupo Aeroportuario into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between EMCOR Group and Grupo Aeroportuario del, you can compare the effects of market volatilities on EMCOR and Grupo Aeroportuario 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 Grupo Aeroportuario. Check out your portfolio center. Please also check ongoing floating volatility patterns of EMCOR and Grupo Aeroportuario.
Diversification Opportunities for EMCOR and Grupo Aeroportuario
-0.24 | Correlation Coefficient |
Very good diversification
The 3 months correlation between EMCOR and Grupo is -0.24. Overlapping area represents the amount of risk that can be diversified away by holding EMCOR Group and Grupo Aeroportuario del in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Grupo Aeroportuario del 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 Grupo Aeroportuario. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Grupo Aeroportuario del has no effect on the direction of EMCOR i.e., EMCOR and Grupo Aeroportuario go up and down completely randomly.
Pair Corralation between EMCOR and Grupo Aeroportuario
Considering the 90-day investment horizon EMCOR Group is expected to generate 1.36 times more return on investment than Grupo Aeroportuario. However, EMCOR is 1.36 times more volatile than Grupo Aeroportuario del. It trades about 0.37 of its potential returns per unit of risk. Grupo Aeroportuario del is currently generating about -0.05 per unit of risk. If you would invest 43,177 in EMCOR Group on August 31, 2024 and sell it today you would earn a total of 7,618 from holding EMCOR Group or generate 17.64% 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. Grupo Aeroportuario del
Performance |
| Timeline |
| EMCOR Group |
| Grupo Aeroportuario del |
EMCOR and Grupo Aeroportuario Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with EMCOR and Grupo Aeroportuario
The main advantage of trading using opposite EMCOR and Grupo Aeroportuario positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if EMCOR position performs unexpectedly, Grupo Aeroportuario 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 Grupo Aeroportuario will offset losses from the drop in Grupo Aeroportuario's long position.The idea behind EMCOR Group and Grupo Aeroportuario del 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.| Grupo Aeroportuario vs. Grupo Aeroportuario del | Grupo Aeroportuario vs. Corporacion America Airports | Grupo Aeroportuario vs. AerSale Corp | Grupo Aeroportuario vs. Flughafen Zrich AG |
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 Idea Breakdown module to analyze constituents of all Macroaxis ideas. Macroaxis investment ideas are predefined, sector-focused investing themes.
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