Correlation Between EMCOR and Shimmick Common
Can any of the company-specific risk be diversified away by investing in both EMCOR and Shimmick Common 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 Shimmick Common into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between EMCOR Group and Shimmick Common, you can compare the effects of market volatilities on EMCOR and Shimmick Common 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 Shimmick Common. Check out your portfolio center. Please also check ongoing floating volatility patterns of EMCOR and Shimmick Common.
Diversification Opportunities for EMCOR and Shimmick Common
-0.69 | Correlation Coefficient |
Excellent diversification
The 3 months correlation between EMCOR and Shimmick is -0.69. Overlapping area represents the amount of risk that can be diversified away by holding EMCOR Group and Shimmick Common in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Shimmick Common 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 Shimmick Common. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Shimmick Common has no effect on the direction of EMCOR i.e., EMCOR and Shimmick Common go up and down completely randomly.
Pair Corralation between EMCOR and Shimmick Common
Considering the 90-day investment horizon EMCOR is expected to generate 2.12 times less return on investment than Shimmick Common. But when comparing it to its historical volatility, EMCOR Group is 4.15 times less risky than Shimmick Common. It trades about 0.13 of its potential returns per unit of risk. Shimmick Common is currently generating about 0.07 of returns per unit of risk over similar time horizon. If you would invest 176.00 in Shimmick Common on September 2, 2024 and sell it today you would earn a total of 59.00 from holding Shimmick Common or generate 33.52% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
EMCOR Group vs. Shimmick Common
Performance |
| Timeline |
| EMCOR Group |
| Shimmick Common |
EMCOR and Shimmick Common Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with EMCOR and Shimmick Common
The main advantage of trading using opposite EMCOR and Shimmick Common positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if EMCOR position performs unexpectedly, Shimmick Common 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 Shimmick Common will offset losses from the drop in Shimmick Common's long position.The idea behind EMCOR Group and Shimmick Common 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.| Shimmick Common vs. Magna International | Shimmick Common vs. Rivian Automotive | Shimmick Common vs. Li Auto | Shimmick Common vs. Modine Manufacturing |
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 Price Ceiling Movement module to calculate and plot Price Ceiling Movement for different equity instruments.
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