Correlation Between MasTec and EMCOR

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

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

Diversification Opportunities for MasTec and EMCOR

0.98

Correlation Coefficient

MasTec  EMCOR

Almost no diversification

The 3 months correlation between MasTec and EMCOR is 0.98. Overlapping area represents the amount of risk that can be diversified away by holding MasTec Inc and EMCOR Group in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on EMCOR Group and MasTec 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 MasTec Inc 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 MasTec i.e., MasTec and EMCOR go up and down completely randomly.

Pair Corralation between MasTec and EMCOR

Considering the 90-day investment horizon MasTec is expected to generate 1.04 times less return on investment than EMCOR. In addition to that, MasTec is 1.1 times more volatile than EMCOR Group. It trades about 0.18 of its total potential returns per unit of risk. EMCOR Group is currently generating about 0.2 per unit of volatility. If you would invest  39,284  in EMCOR Group on August 30, 2024 and sell it today you would earn a total of  11,511  from holding EMCOR Group or generate 29.3% return on investment over 90 days.

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

MasTec Inc  vs.  EMCOR Group

MasTec Inc

Risk-Adjusted Performance

14 of 100

Good

Compared to the overall equity markets, risk-adjusted returns on investments in MasTec Inc are ranked lower than 14 (%) of all global equities and portfolios over the last 90 days. In spite of fairly unsteady basic indicators, MasTec showed solid returns over the last few months and may actually be approaching a breakup point.

EMCOR Group

Risk-Adjusted Performance

15 of 100

Solid

Compared to the overall equity markets, risk-adjusted returns on investments in EMCOR Group are ranked lower than 15 (%) of all global equities and portfolios over the last 90 days. In spite of rather fragile primary indicators, EMCOR exhibited solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with MasTec and EMCOR

The main advantage of trading using opposite MasTec and EMCOR positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if MasTec 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 MasTec Inc 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 Financial Widgets module to easily integrated Macroaxis content with over 30 different plug-and-play financial widgets.