Correlation Between Aker Carbon and Federal Signal
Can any of the company-specific risk be diversified away by investing in both Aker Carbon and Federal Signal 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 Aker Carbon and Federal Signal into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Aker Carbon Capture and Federal Signal, you can compare the effects of market volatilities on Aker Carbon and Federal Signal 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 Aker Carbon with a short position of Federal Signal. Check out your portfolio center. Please also check ongoing floating volatility patterns of Aker Carbon and Federal Signal.
Diversification Opportunities for Aker Carbon and Federal Signal
0.29 | Correlation Coefficient |
Modest diversification
The 3 months correlation between Aker and Federal is 0.29. Overlapping area represents the amount of risk that can be diversified away by holding Aker Carbon Capture and Federal Signal in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Federal Signal and Aker Carbon 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 Aker Carbon Capture are associated (or correlated) with Federal Signal. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Federal Signal has no effect on the direction of Aker Carbon i.e., Aker Carbon and Federal Signal go up and down completely randomly.
Pair Corralation between Aker Carbon and Federal Signal
Assuming the 90 days horizon Aker Carbon Capture is expected to generate 3.25 times more return on investment than Federal Signal. However, Aker Carbon is 3.25 times more volatile than Federal Signal. It trades about 0.22 of its potential returns per unit of risk. Federal Signal is currently generating about 0.0 per unit of risk. If you would invest 54.00 in Aker Carbon Capture on November 18, 2024 and sell it today you would earn a total of 11.00 from holding Aker Carbon Capture or generate 20.37% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Very Weak |
| Accuracy | 95.45% |
| Values | Daily Returns |
Aker Carbon Capture vs. Federal Signal
Performance |
| Timeline |
| Aker Carbon Capture |
| Federal Signal |
Aker Carbon and Federal Signal Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Aker Carbon and Federal Signal
The main advantage of trading using opposite Aker Carbon and Federal Signal positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Aker Carbon position performs unexpectedly, Federal Signal 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 Federal Signal will offset losses from the drop in Federal Signal's long position.| Aker Carbon vs. CO2 Solutions | Aker Carbon vs. LifeQuest World | Aker Carbon vs. TOMI Environmental Solutions | Aker Carbon vs. Zurn Elkay Water |
| Federal Signal vs. Energy Recovery | Federal Signal vs. CECO Environmental Corp | Federal Signal vs. 374Water Common Stock | Federal Signal vs. CO2 Solutions |
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 Idea Optimizer module to use advanced portfolio builder with pre-computed micro ideas to build optimal portfolio .
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