Correlation Between EMCOR and Bowman Consulting
Can any of the company-specific risk be diversified away by investing in both EMCOR and Bowman Consulting 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 Bowman Consulting into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between EMCOR Group and Bowman Consulting Group, you can compare the effects of market volatilities on EMCOR and Bowman Consulting 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 Bowman Consulting. Check out your portfolio center. Please also check ongoing floating volatility patterns of EMCOR and Bowman Consulting.
Diversification Opportunities for EMCOR and Bowman Consulting
0.72 | Correlation Coefficient |
Poor diversification
The 3 months correlation between EMCOR and Bowman is 0.72. Overlapping area represents the amount of risk that can be diversified away by holding EMCOR Group and Bowman Consulting Group in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Bowman Consulting 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 Bowman Consulting. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Bowman Consulting has no effect on the direction of EMCOR i.e., EMCOR and Bowman Consulting go up and down completely randomly.
Pair Corralation between EMCOR and Bowman Consulting
Considering the 90-day investment horizon EMCOR Group is expected to generate 1.12 times more return on investment than Bowman Consulting. However, EMCOR is 1.12 times more volatile than Bowman Consulting Group. It trades about 0.37 of its potential returns per unit of risk. Bowman Consulting Group is currently generating about 0.12 per unit of risk. If you would invest 46,635 in EMCOR Group on October 26, 2024 and sell it today you would earn a total of 6,545 from holding EMCOR Group or generate 14.03% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Significant |
| Accuracy | 100.0% |
| Values | Daily Returns |
EMCOR Group vs. Bowman Consulting Group
Performance |
| Timeline |
| EMCOR Group |
| Bowman Consulting |
EMCOR and Bowman Consulting Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with EMCOR and Bowman Consulting
The main advantage of trading using opposite EMCOR and Bowman Consulting positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if EMCOR position performs unexpectedly, Bowman Consulting 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 Bowman Consulting will offset losses from the drop in Bowman Consulting's long position.The idea behind EMCOR Group and Bowman Consulting 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.| Bowman Consulting vs. EMCOR Group | Bowman Consulting vs. Comfort Systems USA | Bowman Consulting vs. Primoris Services | Bowman Consulting vs. Granite Construction Incorporated |
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 Money Managers module to screen money managers from public funds and ETFs managed around the world.
Other Complementary Tools
| Money Managers Screen money managers from public funds and ETFs managed around the world | |
| Fundamental Analysis View fundamental data based on most recent published financial statements | |
| Competition Analyzer Analyze and compare many basic indicators for a group of related or unrelated entities | |
| Odds Of Bankruptcy Get analysis of equity chance of financial distress in the next 2 years | |
| Premium Stories Follow Macroaxis premium stories from verified contributors across different equity types, categories and coverage scope |