Correlation Between Veralto and EMCOR
Can any of the company-specific risk be diversified away by investing in both Veralto 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 Veralto and EMCOR into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Veralto and EMCOR Group, you can compare the effects of market volatilities on Veralto 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 Veralto with a short position of EMCOR. Check out your portfolio center. Please also check ongoing floating volatility patterns of Veralto and EMCOR.
Diversification Opportunities for Veralto and EMCOR
Very good diversification
The 3 months correlation between Veralto and EMCOR is -0.47. Overlapping area represents the amount of risk that can be diversified away by holding Veralto and EMCOR Group in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on EMCOR Group and Veralto 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 Veralto 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 Veralto i.e., Veralto and EMCOR go up and down completely randomly.
Pair Corralation between Veralto and EMCOR
Given the investment horizon of 90 days Veralto is expected to generate 4.11 times less return on investment than EMCOR. But when comparing it to its historical volatility, Veralto is 1.93 times less risky than EMCOR. It trades about 0.06 of its potential returns per unit of risk. EMCOR Group is currently generating about 0.12 of returns per unit of risk over similar time horizon. If you would invest 37,768 in EMCOR Group on September 3, 2024 and sell it today you would earn a total of 13,244 from holding EMCOR Group or generate 35.07% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Very Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
Veralto vs. EMCOR Group
Performance |
| Timeline |
| Veralto |
| EMCOR Group |
Veralto and EMCOR Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Veralto and EMCOR
The main advantage of trading using opposite Veralto and EMCOR positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Veralto 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.| Veralto vs. EMCOR Group | Veralto vs. Eldorado Gold Corp | Veralto vs. Enersys | Veralto vs. CECO Environmental Corp |
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 Analyst Advice module to analyst recommendations and target price estimates broken down by several categories.
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