Correlation Between Federal Signal and Atmus Filtration
Can any of the company-specific risk be diversified away by investing in both Federal Signal and Atmus Filtration 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 Atmus Filtration into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Federal Signal and Atmus Filtration Technologies, you can compare the effects of market volatilities on Federal Signal and Atmus Filtration 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 Atmus Filtration. Check out your portfolio center. Please also check ongoing floating volatility patterns of Federal Signal and Atmus Filtration.
Diversification Opportunities for Federal Signal and Atmus Filtration
0.37 | Correlation Coefficient |
Weak diversification
The 3 months correlation between Federal and Atmus is 0.37. Overlapping area represents the amount of risk that can be diversified away by holding Federal Signal and Atmus Filtration Technologies in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Atmus Filtration Tec 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 Atmus Filtration. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Atmus Filtration Tec has no effect on the direction of Federal Signal i.e., Federal Signal and Atmus Filtration go up and down completely randomly.
Pair Corralation between Federal Signal and Atmus Filtration
Considering the 90-day investment horizon Federal Signal is expected to generate 1.57 times less return on investment than Atmus Filtration. But when comparing it to its historical volatility, Federal Signal is 1.17 times less risky than Atmus Filtration. It trades about 0.08 of its potential returns per unit of risk. Atmus Filtration Technologies is currently generating about 0.11 of returns per unit of risk over similar time horizon. If you would invest 2,016 in Atmus Filtration Technologies on August 31, 2024 and sell it today you would earn a total of 2,313 from holding Atmus Filtration Technologies or generate 114.73% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Very Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
Federal Signal vs. Atmus Filtration Technologies
Performance |
| Timeline |
| Federal Signal |
| Atmus Filtration Tec |
Federal Signal and Atmus Filtration Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Federal Signal and Atmus Filtration
The main advantage of trading using opposite Federal Signal and Atmus Filtration positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Federal Signal position performs unexpectedly, Atmus Filtration 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 Atmus Filtration will offset losses from the drop in Atmus Filtration's long position.| Federal Signal vs. Energy Recovery | Federal Signal vs. CECO Environmental Corp | Federal Signal vs. 374Water Common Stock | Federal Signal vs. CO2 Solutions |
| Atmus Filtration vs. Inflection Point Acquisition | Atmus Filtration vs. Tandem Diabetes Care | Atmus Filtration vs. Weibo Corp | Atmus Filtration vs. Chester Mining |
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 Competition Analyzer module to analyze and compare many basic indicators for a group of related or unrelated entities.
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