Correlation Between Federal Signal and Aquarius
Can any of the company-specific risk be diversified away by investing in both Federal Signal and Aquarius 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 Aquarius into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Federal Signal and Aquarius AI, you can compare the effects of market volatilities on Federal Signal and Aquarius 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 Aquarius. Check out your portfolio center. Please also check ongoing floating volatility patterns of Federal Signal and Aquarius.
Diversification Opportunities for Federal Signal and Aquarius
-0.09 | Correlation Coefficient |
Good diversification
The 3 months correlation between Federal and Aquarius is -0.09. Overlapping area represents the amount of risk that can be diversified away by holding Federal Signal and Aquarius AI in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Aquarius AI 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 Aquarius. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Aquarius AI has no effect on the direction of Federal Signal i.e., Federal Signal and Aquarius go up and down completely randomly.
Pair Corralation between Federal Signal and Aquarius
Considering the 90-day investment horizon Federal Signal is expected to generate 0.84 times more return on investment than Aquarius. However, Federal Signal is 1.2 times less risky than Aquarius. It trades about 0.08 of its potential returns per unit of risk. Aquarius AI is currently generating about 0.06 per unit of risk. If you would invest 4,881 in Federal Signal on August 23, 2024 and sell it today you would earn a total of 4,601 from holding Federal Signal or generate 94.26% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Insignificant |
| Accuracy | 23.99% |
| Values | Daily Returns |
Federal Signal vs. Aquarius AI
Performance |
| Timeline |
| Federal Signal |
| Aquarius AI |
Risk-Adjusted Performance
0 of 100
Weak | Strong |
Very Weak
Federal Signal and Aquarius Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Federal Signal and Aquarius
The main advantage of trading using opposite Federal Signal and Aquarius positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Federal Signal position performs unexpectedly, Aquarius 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 Aquarius will offset losses from the drop in Aquarius' long position.| Federal Signal vs. Energy Recovery | Federal Signal vs. CECO Environmental Corp | Federal Signal vs. 374Water Common Stock | Federal Signal vs. CO2 Solutions |
| Aquarius vs. Federal Signal | Aquarius vs. Energy Recovery | Aquarius vs. CECO Environmental Corp | Aquarius 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 CEOs Directory module to screen CEOs from public companies around the world.
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