Correlation Between Federal Signal and Advanced Emissions
Can any of the company-specific risk be diversified away by investing in both Federal Signal and Advanced Emissions 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 Federal Signal and Advanced Emissions into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Federal Signal and Advanced Emissions Solutions, you can compare the effects of market volatilities on Federal Signal and Advanced Emissions 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 Federal Signal with a short position of Advanced Emissions. Check out your portfolio center. Please also check ongoing floating volatility patterns of Federal Signal and Advanced Emissions.
Diversification Opportunities for Federal Signal and Advanced Emissions
0.0 | Correlation Coefficient |
Pay attention - limited upside
The 3 months correlation between Federal and Advanced is 0.0. Overlapping area represents the amount of risk that can be diversified away by holding Federal Signal and Advanced Emissions Solutions in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Advanced Emissions and Federal Signal 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 Federal Signal are associated (or correlated) with Advanced Emissions. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Advanced Emissions has no effect on the direction of Federal Signal i.e., Federal Signal and Advanced Emissions go up and down completely randomly.
Pair Corralation between Federal Signal and Advanced Emissions
If you would invest 9,720 in Federal Signal on November 18, 2024 and sell it today you would lose (10.00) from holding Federal Signal or give up 0.1% of portfolio value over 90 days.
| Time Period | 3 Months [change] |
| Direction | Flat |
| Strength | Insignificant |
| Accuracy | 0.0% |
| Values | Daily Returns |
Federal Signal vs. Advanced Emissions Solutions
Performance |
| Timeline |
| Federal Signal |
| Advanced Emissions |
Risk-Adjusted Performance
Very Weak
Weak | Strong |
Federal Signal and Advanced Emissions Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Federal Signal and Advanced Emissions
The main advantage of trading using opposite Federal Signal and Advanced Emissions positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Federal Signal position performs unexpectedly, Advanced Emissions 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 Advanced Emissions will offset losses from the drop in Advanced Emissions' long position.| Federal Signal vs. Energy Recovery | Federal Signal vs. CECO Environmental Corp | Federal Signal vs. 374Water Common Stock | Federal Signal vs. CO2 Solutions |
| Advanced Emissions vs. Vow ASA | Advanced Emissions vs. Seychelle Environmtl | Advanced Emissions vs. Eestech | Advanced Emissions vs. Energy and Water |
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 Latest Portfolios module to quick portfolio dashboard that showcases your latest portfolios.
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