Correlation Between EMCOR and Lithium One
Can any of the company-specific risk be diversified away by investing in both EMCOR and Lithium One 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 Lithium One into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between EMCOR Group and Lithium One Metals, you can compare the effects of market volatilities on EMCOR and Lithium One 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 Lithium One. Check out your portfolio center. Please also check ongoing floating volatility patterns of EMCOR and Lithium One.
Diversification Opportunities for EMCOR and Lithium One
-0.41 | Correlation Coefficient |
Very good diversification
The 3 months correlation between EMCOR and Lithium is -0.41. Overlapping area represents the amount of risk that can be diversified away by holding EMCOR Group and Lithium One Metals in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Lithium One Metals 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 Lithium One. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Lithium One Metals has no effect on the direction of EMCOR i.e., EMCOR and Lithium One go up and down completely randomly.
Pair Corralation between EMCOR and Lithium One
Considering the 90-day investment horizon EMCOR Group is expected to generate 0.17 times more return on investment than Lithium One. However, EMCOR Group is 5.99 times less risky than Lithium One. It trades about 0.29 of its potential returns per unit of risk. Lithium One Metals is currently generating about -0.07 per unit of risk. If you would invest 45,321 in EMCOR Group on September 2, 2024 and sell it today you would earn a total of 5,691 from holding EMCOR Group or generate 12.56% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Very Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
EMCOR Group vs. Lithium One Metals
Performance |
| Timeline |
| EMCOR Group |
| Lithium One Metals |
EMCOR and Lithium One Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with EMCOR and Lithium One
The main advantage of trading using opposite EMCOR and Lithium One positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if EMCOR position performs unexpectedly, Lithium One 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 Lithium One will offset losses from the drop in Lithium One's long position.The idea behind EMCOR Group and Lithium One Metals 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.| Lithium One vs. SunLink Health Systems | Lithium One vs. Capital Clean Energy | Lithium One vs. National Vision Holdings | Lithium One vs. SkyWest |
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 Headlines Timeline module to stay connected to all market stories and filter out noise. Drill down to analyze hype elasticity.
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