Correlation Between Federal Signal and EAU Technologies
Can any of the company-specific risk be diversified away by investing in both Federal Signal and EAU Technologies 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 EAU Technologies into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Federal Signal and EAU Technologies, you can compare the effects of market volatilities on Federal Signal and EAU Technologies 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 EAU Technologies. Check out your portfolio center. Please also check ongoing floating volatility patterns of Federal Signal and EAU Technologies.
Diversification Opportunities for Federal Signal and EAU Technologies
0.0 | Correlation Coefficient |
Pay attention - limited upside
The 3 months correlation between Federal and EAU is 0.0. Overlapping area represents the amount of risk that can be diversified away by holding Federal Signal and EAU Technologies in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on EAU Technologies 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 EAU Technologies. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of EAU Technologies has no effect on the direction of Federal Signal i.e., Federal Signal and EAU Technologies go up and down completely randomly.
Pair Corralation between Federal Signal and EAU Technologies
If you would invest 8,708 in Federal Signal on August 30, 2024 and sell it today you would earn a total of 1,080 from holding Federal Signal or generate 12.4% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Flat |
| Strength | Insignificant |
| Accuracy | 100.0% |
| Values | Daily Returns |
Federal Signal vs. EAU Technologies
Performance |
| Timeline |
| Federal Signal |
| EAU Technologies |
Federal Signal and EAU Technologies Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Federal Signal and EAU Technologies
The main advantage of trading using opposite Federal Signal and EAU Technologies positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Federal Signal position performs unexpectedly, EAU Technologies 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 EAU Technologies will offset losses from the drop in EAU Technologies' long position.| Federal Signal vs. Energy Recovery | Federal Signal vs. CECO Environmental Corp | Federal Signal vs. 374Water Common Stock | Federal Signal vs. CO2 Solutions |
| EAU Technologies vs. Veralto | EAU Technologies vs. China Conch Venture | EAU Technologies vs. Zurn Elkay Water | EAU Technologies vs. Federal Signal |
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 Money Managers module to screen money managers from public funds and ETFs managed around the world.
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