Correlation Between Ross Stores and EMCOR
Can any of the company-specific risk be diversified away by investing in both Ross Stores 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 Ross Stores and EMCOR into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Ross Stores and EMCOR Group, you can compare the effects of market volatilities on Ross Stores 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 Ross Stores with a short position of EMCOR. Check out your portfolio center. Please also check ongoing floating volatility patterns of Ross Stores and EMCOR.
Diversification Opportunities for Ross Stores and EMCOR
-0.41 | Correlation Coefficient |
Very good diversification
The 3 months correlation between Ross and EMCOR is -0.41. Overlapping area represents the amount of risk that can be diversified away by holding Ross Stores and EMCOR Group in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on EMCOR Group and Ross Stores 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 Ross Stores 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 Ross Stores i.e., Ross Stores and EMCOR go up and down completely randomly.
Pair Corralation between Ross Stores and EMCOR
Given the investment horizon of 90 days Ross Stores is expected to generate 2.62 times less return on investment than EMCOR. But when comparing it to its historical volatility, Ross Stores is 1.37 times less risky than EMCOR. It trades about 0.09 of its potential returns per unit of risk. EMCOR Group is currently generating about 0.17 of returns per unit of risk over similar time horizon. If you would invest 17,392 in EMCOR Group on September 4, 2024 and sell it today you would earn a total of 33,117 from holding EMCOR Group or generate 190.42% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Very Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
Ross Stores vs. EMCOR Group
Performance |
| Timeline |
| Ross Stores |
| EMCOR Group |
Ross Stores and EMCOR Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Ross Stores and EMCOR
The main advantage of trading using opposite Ross Stores and EMCOR positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Ross Stores 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.| Ross Stores vs. Burlington Stores | Ross Stores vs. American Eagle Outfitters | Ross Stores vs. Lululemon Athletica | Ross Stores vs. Foot Locker |
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 Headlines Timeline module to stay connected to all market stories and filter out noise. Drill down to analyze hype elasticity.
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