Correlation Between EMCOR and ChampionX

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

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

Diversification Opportunities for EMCOR and ChampionX

0.1

Correlation Coefficient

EMCOR  ChampionX

Average diversification

The 3 months correlation between EMCOR and ChampionX is 0.1. Overlapping area represents the amount of risk that can be diversified away by holding EMCOR Group and ChampionX in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on ChampionX and EMCOR 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 EMCOR Group are associated (or correlated) with ChampionX. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of ChampionX has no effect on the direction of EMCOR i.e., EMCOR and ChampionX go up and down completely randomly.

Pair Corralation between EMCOR and ChampionX

Considering the 90-day investment horizon EMCOR Group is expected to generate 1.02 times more return on investment than ChampionX. However, EMCOR is 1.02 times more volatile than ChampionX. It trades about -0.28 of its potential returns per unit of risk. ChampionX is currently generating about -0.48 per unit of risk. If you would invest  51,099  in EMCOR Group on September 26, 2024 and sell it today you would lose (4,750) from holding EMCOR Group or give up 9.3% of portfolio value over 90 days.

Time Period	3 Months [change]
Direction	Moves Together
Strength	Insignificant
Accuracy	100.0%
Values	Daily Returns

EMCOR Group  vs.  ChampionX

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.

ChampionX

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days ChampionX has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of latest unfluctuating performance, the Stock's technical indicators remain strong and the current disturbance on Wall Street may also be a sign of long term gains for the company investors.

Pair Trading with EMCOR and ChampionX

The main advantage of trading using opposite EMCOR and ChampionX positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if EMCOR position performs unexpectedly, ChampionX 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 ChampionX will offset losses from the drop in ChampionX's long position.

The idea behind EMCOR Group and ChampionX 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 Odds Of Bankruptcy module to get analysis of equity chance of financial distress in the next 2 years.