Correlation Between GENERAL and EMCOR
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By analyzing existing cross correlation between GENERAL ELEC CAP and EMCOR Group, you can compare the effects of market volatilities on GENERAL 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 GENERAL with a short position of EMCOR. Check out your portfolio center. Please also check ongoing floating volatility patterns of GENERAL and EMCOR.
Diversification Opportunities for GENERAL and EMCOR
Poor diversification
The 3 months correlation between GENERAL and EMCOR is 0.7. Overlapping area represents the amount of risk that can be diversified away by holding GENERAL ELEC CAP and EMCOR Group in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on EMCOR Group and GENERAL 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 GENERAL ELEC CAP 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 GENERAL i.e., GENERAL and EMCOR go up and down completely randomly.
Pair Corralation between GENERAL and EMCOR
Assuming the 90 days trading horizon GENERAL is expected to generate 2839.0 times less return on investment than EMCOR. But when comparing it to its historical volatility, GENERAL ELEC CAP is 7.83 times less risky than EMCOR. It trades about 0.0 of its potential returns per unit of risk. EMCOR Group is currently generating about 0.33 of returns per unit of risk over similar time horizon. If you would invest 35,843 in EMCOR Group on September 2, 2024 and sell it today you would earn a total of 15,169 from holding EMCOR Group or generate 42.32% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Significant |
| Accuracy | 23.44% |
| Values | Daily Returns |
GENERAL ELEC CAP vs. EMCOR Group
Performance |
| Timeline |
| GENERAL ELEC CAP |
| EMCOR Group |
GENERAL and EMCOR Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with GENERAL and EMCOR
The main advantage of trading using opposite GENERAL and EMCOR positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if GENERAL 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.The idea behind GENERAL ELEC CAP and EMCOR Group 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.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 Odds Of Bankruptcy module to get analysis of equity chance of financial distress in the next 2 years.
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