Correlation Between EMCOR and Ross Stores
Can any of the company-specific risk be diversified away by investing in both EMCOR and Ross Stores 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 Ross Stores into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between EMCOR Group and Ross Stores, you can compare the effects of market volatilities on EMCOR and Ross Stores 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 Ross Stores. Check out your portfolio center. Please also check ongoing floating volatility patterns of EMCOR and Ross Stores.
Diversification Opportunities for EMCOR and Ross Stores
-0.47 | Correlation Coefficient |
Very good diversification
The 3 months correlation between EMCOR and Ross is -0.47. Overlapping area represents the amount of risk that can be diversified away by holding EMCOR Group and Ross Stores in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Ross Stores 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 Ross Stores. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Ross Stores has no effect on the direction of EMCOR i.e., EMCOR and Ross Stores go up and down completely randomly.
Pair Corralation between EMCOR and Ross Stores
Considering the 90-day investment horizon EMCOR Group is expected to generate 1.4 times more return on investment than Ross Stores. However, EMCOR is 1.4 times more volatile than Ross Stores. It trades about 0.14 of its potential returns per unit of risk. Ross Stores is currently generating about 0.05 per unit of risk. If you would invest 14,922 in EMCOR Group on September 3, 2024 and sell it today you would earn a total of 36,090 from holding EMCOR Group or generate 241.86% 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. Ross Stores
Performance |
| Timeline |
| EMCOR Group |
| Ross Stores |
EMCOR and Ross Stores Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with EMCOR and Ross Stores
The main advantage of trading using opposite EMCOR and Ross Stores positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if EMCOR position performs unexpectedly, Ross Stores 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 Ross Stores will offset losses from the drop in Ross Stores' long position.The idea behind EMCOR Group and Ross Stores 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.| Ross Stores vs. Burlington Stores | Ross Stores vs. American Eagle Outfitters | Ross Stores vs. Lululemon Athletica | Ross Stores vs. Foot Locker |
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 Economic Indicators module to top statistical indicators that provide insights into how an economy is performing.
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