Correlation Between Energy Recovery and Fuel Tech
Can any of the company-specific risk be diversified away by investing in both Energy Recovery and Fuel Tech 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 Energy Recovery and Fuel Tech into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Energy Recovery and Fuel Tech, you can compare the effects of market volatilities on Energy Recovery and Fuel Tech 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 Energy Recovery with a short position of Fuel Tech. Check out your portfolio center. Please also check ongoing floating volatility patterns of Energy Recovery and Fuel Tech.
Diversification Opportunities for Energy Recovery and Fuel Tech
0.24 | Correlation Coefficient |
Modest diversification
The 3 months correlation between Energy and Fuel is 0.24. Overlapping area represents the amount of risk that can be diversified away by holding Energy Recovery and Fuel Tech in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Fuel Tech and Energy Recovery 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 Energy Recovery are associated (or correlated) with Fuel Tech. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Fuel Tech has no effect on the direction of Energy Recovery i.e., Energy Recovery and Fuel Tech go up and down completely randomly.
Pair Corralation between Energy Recovery and Fuel Tech
Given the investment horizon of 90 days Energy Recovery is expected to generate 1.81 times more return on investment than Fuel Tech. However, Energy Recovery is 1.81 times more volatile than Fuel Tech. It trades about 0.05 of its potential returns per unit of risk. Fuel Tech is currently generating about 0.0 per unit of risk. If you would invest 1,380 in Energy Recovery on August 24, 2024 and sell it today you would earn a total of 183.00 from holding Energy Recovery or generate 13.26% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Very Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
Energy Recovery vs. Fuel Tech
Performance |
| Timeline |
| Energy Recovery |
| Fuel Tech |
Energy Recovery and Fuel Tech Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Energy Recovery and Fuel Tech
The main advantage of trading using opposite Energy Recovery and Fuel Tech positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Energy Recovery position performs unexpectedly, Fuel Tech 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 Fuel Tech will offset losses from the drop in Fuel Tech's long position.| Energy Recovery vs. Zurn Elkay Water | Energy Recovery vs. CECO Environmental Corp | Energy Recovery vs. 374Water Common Stock | Energy Recovery vs. Federal Signal |
| Fuel Tech vs. Federal Signal | Fuel Tech vs. Zurn Elkay Water | Fuel Tech vs. Energy Recovery | Fuel Tech vs. 374Water Common Stock |
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 Earnings Calls module to check upcoming earnings announcements updated hourly across public exchanges.
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