Correlation Between EMCOR and Advantage Solutions

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

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

Diversification Opportunities for EMCOR and Advantage Solutions

0.43

Correlation Coefficient

EMCOR  Advantage Solutions

Very weak diversification

The 3 months correlation between EMCOR and Advantage is 0.43. Overlapping area represents the amount of risk that can be diversified away by holding EMCOR Group and Advantage Solutions in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Advantage Solutions 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 Advantage Solutions. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Advantage Solutions has no effect on the direction of EMCOR i.e., EMCOR and Advantage Solutions go up and down completely randomly.

Pair Corralation between EMCOR and Advantage Solutions

Considering the 90-day investment horizon EMCOR Group is expected to generate 0.26 times more return on investment than Advantage Solutions. However, EMCOR Group is 3.81 times less risky than Advantage Solutions. It trades about 0.32 of its potential returns per unit of risk. Advantage Solutions is currently generating about 0.03 per unit of risk. If you would invest  43,579  in EMCOR Group on May 5, 2025 and sell it today you would earn a total of  18,888  from holding EMCOR Group or generate 43.34% return on investment over 90 days.

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

EMCOR Group  vs.  Advantage Solutions

EMCOR Group

Risk-Adjusted Performance

Solid

Compared to the overall equity markets, risk-adjusted returns on investments in EMCOR Group are ranked lower than 25 (%) 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.

Advantage Solutions

Risk-Adjusted Performance

Weak

Compared to the overall equity markets, risk-adjusted returns on investments in Advantage Solutions are ranked lower than 2 (%) of all global equities and portfolios over the last 90 days. In spite of fairly weak fundamental indicators, Advantage Solutions may actually be approaching a critical reversion point that can send shares even higher in September 2025.

Pair Trading with EMCOR and Advantage Solutions

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

The idea behind EMCOR Group and Advantage Solutions 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 Portfolio Dashboard module to portfolio dashboard that provides centralized access to all your investments.