Correlation Between Fuel Tech and Delta CleanTech
Can any of the company-specific risk be diversified away by investing in both Fuel Tech and Delta CleanTech 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 Fuel Tech and Delta CleanTech into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Fuel Tech and Delta CleanTech, you can compare the effects of market volatilities on Fuel Tech and Delta CleanTech 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 Fuel Tech with a short position of Delta CleanTech. Check out your portfolio center. Please also check ongoing floating volatility patterns of Fuel Tech and Delta CleanTech.
Diversification Opportunities for Fuel Tech and Delta CleanTech
-0.4 | Correlation Coefficient |
Very good diversification
The 3 months correlation between Fuel and Delta is -0.4. Overlapping area represents the amount of risk that can be diversified away by holding Fuel Tech and Delta CleanTech in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Delta CleanTech and Fuel Tech 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 Fuel Tech are associated (or correlated) with Delta CleanTech. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Delta CleanTech has no effect on the direction of Fuel Tech i.e., Fuel Tech and Delta CleanTech go up and down completely randomly.
Pair Corralation between Fuel Tech and Delta CleanTech
Given the investment horizon of 90 days Fuel Tech is expected to generate 0.2 times more return on investment than Delta CleanTech. However, Fuel Tech is 5.06 times less risky than Delta CleanTech. It trades about 0.06 of its potential returns per unit of risk. Delta CleanTech is currently generating about -0.02 per unit of risk. If you would invest 104.00 in Fuel Tech on August 27, 2024 and sell it today you would earn a total of 3.00 from holding Fuel Tech or generate 2.88% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Very Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
Fuel Tech vs. Delta CleanTech
Performance |
| Timeline |
| Fuel Tech |
| Delta CleanTech |
Fuel Tech and Delta CleanTech Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Fuel Tech and Delta CleanTech
The main advantage of trading using opposite Fuel Tech and Delta CleanTech positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Fuel Tech position performs unexpectedly, Delta CleanTech 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 Delta CleanTech will offset losses from the drop in Delta CleanTech's long position.| Fuel Tech vs. Federal Signal | Fuel Tech vs. CECO Environmental Corp | Fuel Tech vs. Zurn Elkay Water | Fuel Tech vs. Greenlane Renewables |
| Delta CleanTech vs. TOMI Environmental Solutions | Delta CleanTech vs. Zurn Elkay Water | Delta CleanTech vs. Federal Signal | Delta CleanTech vs. Energy Recovery |
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 Pattern Recognition module to use different Pattern Recognition models to time the market across multiple global exchanges.
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