Correlation Between Levi Strauss and EMCOR
Can any of the company-specific risk be diversified away by investing in both Levi Strauss and EMCOR 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 Levi Strauss and EMCOR into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Levi Strauss Co and EMCOR Group, you can compare the effects of market volatilities on Levi Strauss and EMCOR 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 Levi Strauss with a short position of EMCOR. Check out your portfolio center. Please also check ongoing floating volatility patterns of Levi Strauss and EMCOR.
Diversification Opportunities for Levi Strauss and EMCOR
-0.24 | Correlation Coefficient |
Very good diversification
The 3 months correlation between Levi and EMCOR is -0.24. Overlapping area represents the amount of risk that can be diversified away by holding Levi Strauss Co and EMCOR Group in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on EMCOR Group and Levi Strauss 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 Levi Strauss Co are associated (or correlated) with EMCOR. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of EMCOR Group has no effect on the direction of Levi Strauss i.e., Levi Strauss and EMCOR go up and down completely randomly.
Pair Corralation between Levi Strauss and EMCOR
Given the investment horizon of 90 days Levi Strauss Co is expected to generate 0.29 times more return on investment than EMCOR. However, Levi Strauss Co is 3.44 times less risky than EMCOR. It trades about 0.17 of its potential returns per unit of risk. EMCOR Group is currently generating about 0.01 per unit of risk. If you would invest 1,730 in Levi Strauss Co on November 1, 2024 and sell it today you would earn a total of 79.00 from holding Levi Strauss Co or generate 4.57% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Insignificant |
| Accuracy | 95.0% |
| Values | Daily Returns |
Levi Strauss Co vs. EMCOR Group
Performance |
| Timeline |
| Levi Strauss |
| EMCOR Group |
Levi Strauss and EMCOR Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Levi Strauss and EMCOR
The main advantage of trading using opposite Levi Strauss and EMCOR positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Levi Strauss position performs unexpectedly, EMCOR 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 EMCOR will offset losses from the drop in EMCOR's long position.| Levi Strauss vs. LYFT Inc | Levi Strauss vs. Tapestry | Levi Strauss vs. Capri Holdings | Levi Strauss vs. YETI Holdings |
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 Instant Ratings module to determine any equity ratings based on digital recommendations. Macroaxis instant equity ratings are based on combination of fundamental analysis and risk-adjusted market performance.
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