Correlation Between Federal Signal and Energy Recovery
Can any of the company-specific risk be diversified away by investing in both Federal Signal and Energy Recovery 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 Energy Recovery into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Federal Signal and Energy Recovery, you can compare the effects of market volatilities on Federal Signal and Energy Recovery 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 Energy Recovery. Check out your portfolio center. Please also check ongoing floating volatility patterns of Federal Signal and Energy Recovery.
Diversification Opportunities for Federal Signal and Energy Recovery
-0.39 | Correlation Coefficient |
Very good diversification
The 3 months correlation between Federal and Energy is -0.39. Overlapping area represents the amount of risk that can be diversified away by holding Federal Signal and Energy Recovery in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Energy Recovery 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 Energy Recovery. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Energy Recovery has no effect on the direction of Federal Signal i.e., Federal Signal and Energy Recovery go up and down completely randomly.
Pair Corralation between Federal Signal and Energy Recovery
Considering the 90-day investment horizon Federal Signal is expected to generate 60.0 times less return on investment than Energy Recovery. But when comparing it to its historical volatility, Federal Signal is 1.08 times less risky than Energy Recovery. It trades about 0.0 of its potential returns per unit of risk. Energy Recovery is currently generating about 0.13 of returns per unit of risk over similar time horizon. If you would invest 1,477 in Energy Recovery on November 18, 2024 and sell it today you would earn a total of 52.00 from holding Energy Recovery or generate 3.52% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Insignificant |
| Accuracy | 100.0% |
| Values | Daily Returns |
Federal Signal vs. Energy Recovery
Performance |
| Timeline |
| Federal Signal |
| Energy Recovery |
Federal Signal and Energy Recovery Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Federal Signal and Energy Recovery
The main advantage of trading using opposite Federal Signal and Energy Recovery positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Federal Signal position performs unexpectedly, Energy Recovery 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 Energy Recovery will offset losses from the drop in Energy Recovery'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 |
| Energy Recovery vs. Zurn Elkay Water | Energy Recovery vs. CECO Environmental Corp | Energy Recovery vs. 374Water Common Stock | Energy Recovery 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 Pair Correlation module to compare performance and examine fundamental relationship between any two equity instruments.
Other Complementary Tools
| Competition Analyzer Analyze and compare many basic indicators for a group of related or unrelated entities | |
| Balance Of Power Check stock momentum by analyzing Balance Of Power indicator and other technical ratios | |
| Positions Ratings Determine portfolio positions ratings based on digital equity recommendations. Macroaxis instant position ratings are based on combination of fundamental analysis and risk-adjusted market performance | |
| Risk-Return Analysis View associations between returns expected from investment and the risk you assume | |
| Stocks Directory Find actively traded stocks across global markets |