Correlation Between IES Holdings and Comfort Systems
Can any of the company-specific risk be diversified away by investing in both IES Holdings and Comfort Systems 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 IES Holdings and Comfort Systems into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between IES Holdings and Comfort Systems USA, you can compare the effects of market volatilities on IES Holdings and Comfort Systems 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 IES Holdings with a short position of Comfort Systems. Check out your portfolio center. Please also check ongoing floating volatility patterns of IES Holdings and Comfort Systems.
Diversification Opportunities for IES Holdings and Comfort Systems
0.76 | Correlation Coefficient |
Poor diversification
The 3 months correlation between IES and Comfort is 0.76. Overlapping area represents the amount of risk that can be diversified away by holding IES Holdings and Comfort Systems USA in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Comfort Systems USA and IES Holdings 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 IES Holdings are associated (or correlated) with Comfort Systems. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Comfort Systems USA has no effect on the direction of IES Holdings i.e., IES Holdings and Comfort Systems go up and down completely randomly.
Pair Corralation between IES Holdings and Comfort Systems
Given the investment horizon of 90 days IES Holdings is expected to generate 1.16 times more return on investment than Comfort Systems. However, IES Holdings is 1.16 times more volatile than Comfort Systems USA. It trades about 0.1 of its potential returns per unit of risk. Comfort Systems USA is currently generating about 0.07 per unit of risk. If you would invest 22,104 in IES Holdings on November 9, 2024 and sell it today you would earn a total of 2,106 from holding IES Holdings or generate 9.53% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Significant |
| Accuracy | 100.0% |
| Values | Daily Returns |
IES Holdings vs. Comfort Systems USA
Performance |
| Timeline |
| IES Holdings |
| Comfort Systems USA |
IES Holdings and Comfort Systems Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with IES Holdings and Comfort Systems
The main advantage of trading using opposite IES Holdings and Comfort Systems positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if IES Holdings position performs unexpectedly, Comfort Systems 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 Comfort Systems will offset losses from the drop in Comfort Systems' long position.| IES Holdings vs. EMCOR Group | IES Holdings vs. Comfort Systems USA | IES Holdings vs. Primoris Services | IES Holdings vs. Granite Construction Incorporated |
| Comfort Systems vs. MYR Group | Comfort Systems vs. Granite Construction Incorporated | Comfort Systems vs. Dycom Industries | Comfort Systems vs. MasTec Inc |
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 Manager module to state of the art Portfolio Manager to monitor and improve performance of your invested capital.
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