Correlation Between EMCOR and VirnetX Holding
Can any of the company-specific risk be diversified away by investing in both EMCOR and VirnetX Holding 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 VirnetX Holding into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between EMCOR Group and VirnetX Holding Corp, you can compare the effects of market volatilities on EMCOR and VirnetX Holding 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 VirnetX Holding. Check out your portfolio center. Please also check ongoing floating volatility patterns of EMCOR and VirnetX Holding.
Diversification Opportunities for EMCOR and VirnetX Holding
-0.83 | Correlation Coefficient |
Pay attention - limited upside
The 3 months correlation between EMCOR and VirnetX is -0.83. Overlapping area represents the amount of risk that can be diversified away by holding EMCOR Group and VirnetX Holding Corp in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on VirnetX Holding Corp 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 VirnetX Holding. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of VirnetX Holding Corp has no effect on the direction of EMCOR i.e., EMCOR and VirnetX Holding go up and down completely randomly.
Pair Corralation between EMCOR and VirnetX Holding
Considering the 90-day investment horizon EMCOR Group is expected to generate 0.44 times more return on investment than VirnetX Holding. However, EMCOR Group is 2.25 times less risky than VirnetX Holding. It trades about 0.14 of its potential returns per unit of risk. VirnetX Holding Corp is currently generating about 0.0 per unit of risk. If you would invest 31,292 in EMCOR Group on August 27, 2024 and sell it today you would earn a total of 19,200 from holding EMCOR Group or generate 61.36% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Significant |
| Accuracy | 100.0% |
| Values | Daily Returns |
EMCOR Group vs. VirnetX Holding Corp
Performance |
| Timeline |
| EMCOR Group |
| VirnetX Holding Corp |
EMCOR and VirnetX Holding Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with EMCOR and VirnetX Holding
The main advantage of trading using opposite EMCOR and VirnetX Holding positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if EMCOR position performs unexpectedly, VirnetX Holding 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 VirnetX Holding will offset losses from the drop in VirnetX Holding's long position.The idea behind EMCOR Group and VirnetX Holding Corp 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.| VirnetX Holding vs. Hub Cyber Security | VirnetX Holding vs. authID Inc | VirnetX Holding vs. Aurora Mobile | VirnetX Holding vs. Taoping |
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 Bond Analysis module to evaluate and analyze corporate bonds as a potential investment for your portfolios..
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