Correlation Between Federal Signal and Molekule
Can any of the company-specific risk be diversified away by investing in both Federal Signal and Molekule 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 Molekule into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Federal Signal and Molekule Group, you can compare the effects of market volatilities on Federal Signal and Molekule 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 Molekule. Check out your portfolio center. Please also check ongoing floating volatility patterns of Federal Signal and Molekule.
Diversification Opportunities for Federal Signal and Molekule
-0.15 | Correlation Coefficient |
Good diversification
The 3 months correlation between Federal and Molekule is -0.15. Overlapping area represents the amount of risk that can be diversified away by holding Federal Signal and Molekule Group in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Molekule Group 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 Molekule. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Molekule Group has no effect on the direction of Federal Signal i.e., Federal Signal and Molekule go up and down completely randomly.
Pair Corralation between Federal Signal and Molekule
Considering the 90-day investment horizon Federal Signal is expected to generate 0.29 times more return on investment than Molekule. However, Federal Signal is 3.48 times less risky than Molekule. It trades about 0.09 of its potential returns per unit of risk. Molekule Group is currently generating about -0.02 per unit of risk. If you would invest 4,621 in Federal Signal on August 27, 2024 and sell it today you would earn a total of 4,966 from holding Federal Signal or generate 107.47% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Insignificant |
| Accuracy | 31.65% |
| Values | Daily Returns |
Federal Signal vs. Molekule Group
Performance |
| Timeline |
| Federal Signal |
| Molekule Group |
Risk-Adjusted Performance
0 of 100
Weak | Strong |
Very Weak
Federal Signal and Molekule Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Federal Signal and Molekule
The main advantage of trading using opposite Federal Signal and Molekule positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Federal Signal position performs unexpectedly, Molekule 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 Molekule will offset losses from the drop in Molekule'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 |
| Molekule vs. Procter Gamble | Molekule vs. PennantPark Floating Rate | Molekule vs. Church Dwight | Molekule vs. Sonida Senior Living |
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 Balance Of Power module to check stock momentum by analyzing Balance Of Power indicator and other technical ratios.
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