Correlation Between EMCOR and Valeura Energy
Can any of the company-specific risk be diversified away by investing in both EMCOR and Valeura Energy 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 Valeura Energy into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between EMCOR Group and Valeura Energy, you can compare the effects of market volatilities on EMCOR and Valeura Energy 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 Valeura Energy. Check out your portfolio center. Please also check ongoing floating volatility patterns of EMCOR and Valeura Energy.
Diversification Opportunities for EMCOR and Valeura Energy
0.51 | Correlation Coefficient |
Very weak diversification
The 3 months correlation between EMCOR and Valeura is 0.51. Overlapping area represents the amount of risk that can be diversified away by holding EMCOR Group and Valeura Energy in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Valeura Energy 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 Valeura Energy. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Valeura Energy has no effect on the direction of EMCOR i.e., EMCOR and Valeura Energy go up and down completely randomly.
Pair Corralation between EMCOR and Valeura Energy
Considering the 90-day investment horizon EMCOR is expected to generate 2.28 times less return on investment than Valeura Energy. But when comparing it to its historical volatility, EMCOR Group is 2.37 times less risky than Valeura Energy. It trades about 0.29 of its potential returns per unit of risk. Valeura Energy is currently generating about 0.28 of returns per unit of risk over similar time horizon. If you would invest 329.00 in Valeura Energy on September 2, 2024 and sell it today you would earn a total of 96.00 from holding Valeura Energy or generate 29.18% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
EMCOR Group vs. Valeura Energy
Performance |
| Timeline |
| EMCOR Group |
| Valeura Energy |
EMCOR and Valeura Energy Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with EMCOR and Valeura Energy
The main advantage of trading using opposite EMCOR and Valeura Energy positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if EMCOR position performs unexpectedly, Valeura Energy 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 Valeura Energy will offset losses from the drop in Valeura Energy's long position.The idea behind EMCOR Group and Valeura Energy 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.| Valeura Energy vs. Legacy Education | Valeura Energy vs. Apple Inc | Valeura Energy vs. NVIDIA | Valeura Energy vs. Microsoft |
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 Portfolio Analyzer module to portfolio analysis module that provides access to portfolio diagnostics and optimization engine.
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