Correlation Between Brenmiller Energy and EMCOR

Can any of the company-specific risk be diversified away by investing in both Brenmiller Energy 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 Brenmiller Energy and EMCOR into the same portfolio, which is an essential part of the fundamental portfolio management process.

By analyzing existing cross correlation between Brenmiller Energy Ltd and EMCOR Group, you can compare the effects of market volatilities on Brenmiller Energy 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 Brenmiller Energy with a short position of EMCOR. Check out your portfolio center. Please also check ongoing floating volatility patterns of Brenmiller Energy and EMCOR.

Diversification Opportunities for Brenmiller Energy and EMCOR

-0.44

Correlation Coefficient

Brenmiller Energy  EMCOR

Very good diversification

The 3 months correlation between Brenmiller and EMCOR is -0.44. Overlapping area represents the amount of risk that can be diversified away by holding Brenmiller Energy Ltd and EMCOR Group in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on EMCOR Group and Brenmiller Energy 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 Brenmiller Energy Ltd 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 Brenmiller Energy i.e., Brenmiller Energy and EMCOR go up and down completely randomly.

Pair Corralation between Brenmiller Energy and EMCOR

Given the investment horizon of 90 days Brenmiller Energy Ltd is expected to generate 2.93 times more return on investment than EMCOR. However, Brenmiller Energy is 2.93 times more volatile than EMCOR Group. It trades about 0.08 of its potential returns per unit of risk. EMCOR Group is currently generating about 0.08 per unit of risk. If you would invest  87.00  in Brenmiller Energy Ltd on September 26, 2024 and sell it today you would earn a total of  18.00  from holding Brenmiller Energy Ltd or generate 20.69% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Against
Strength	Very Weak
Accuracy	100.0%
Values	Daily Returns

Brenmiller Energy Ltd  vs.  EMCOR Group

Brenmiller Energy

Risk-Adjusted Performance

6 of 100

Insignificant

Compared to the overall equity markets, risk-adjusted returns on investments in Brenmiller Energy Ltd are ranked lower than 6 (%) of all global equities and portfolios over the last 90 days. Despite nearly abnormal basic indicators, Brenmiller Energy reported solid returns over the last few months and may actually be approaching a breakup point.

EMCOR Group

Risk-Adjusted Performance

6 of 100

Modest

Compared to the overall equity markets, risk-adjusted returns on investments in EMCOR Group are ranked lower than 6 (%) of all global equities and portfolios over the last 90 days. In spite of rather unsteady primary indicators, EMCOR may actually be approaching a critical reversion point that can send shares even higher in January 2025.

Pair Trading with Brenmiller Energy and EMCOR

The main advantage of trading using opposite Brenmiller Energy and EMCOR positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Brenmiller Energy 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 Brenmiller Energy Ltd 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.

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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 Alpha Finder module to use alpha and beta coefficients to find investment opportunities after accounting for the risk.