Correlation Between EMCOR and NV5 Global
Can any of the company-specific risk be diversified away by investing in both EMCOR and NV5 Global 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 NV5 Global into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between EMCOR Group and NV5 Global, you can compare the effects of market volatilities on EMCOR and NV5 Global 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 NV5 Global. Check out your portfolio center. Please also check ongoing floating volatility patterns of EMCOR and NV5 Global.
Diversification Opportunities for EMCOR and NV5 Global
-0.01 | Correlation Coefficient |
Good diversification
The 3 months correlation between EMCOR and NV5 is -0.01. Overlapping area represents the amount of risk that can be diversified away by holding EMCOR Group and NV5 Global in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on NV5 Global 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 NV5 Global. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of NV5 Global has no effect on the direction of EMCOR i.e., EMCOR and NV5 Global go up and down completely randomly.
Pair Corralation between EMCOR and NV5 Global
Considering the 90-day investment horizon EMCOR Group is expected to generate 0.95 times more return on investment than NV5 Global. However, EMCOR Group is 1.05 times less risky than NV5 Global. It trades about 0.4 of its potential returns per unit of risk. NV5 Global is currently generating about 0.03 per unit of risk. If you would invest 46,326 in EMCOR Group on October 25, 2024 and sell it today you would earn a total of 7,273 from holding EMCOR Group or generate 15.7% 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. NV5 Global
Performance |
| Timeline |
| EMCOR Group |
| NV5 Global |
EMCOR and NV5 Global Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with EMCOR and NV5 Global
The main advantage of trading using opposite EMCOR and NV5 Global positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if EMCOR position performs unexpectedly, NV5 Global 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 NV5 Global will offset losses from the drop in NV5 Global's long position.The idea behind EMCOR Group and NV5 Global 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.| NV5 Global vs. EMCOR Group | NV5 Global vs. Comfort Systems USA | NV5 Global vs. Primoris Services | NV5 Global 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 Equity Forecasting module to use basic forecasting models to generate price predictions and determine price momentum.
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