Correlation Between Fuel Tech and Vow ASA
Can any of the company-specific risk be diversified away by investing in both Fuel Tech and Vow ASA 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 Vow ASA into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Fuel Tech and Vow ASA, you can compare the effects of market volatilities on Fuel Tech and Vow ASA 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 Vow ASA. Check out your portfolio center. Please also check ongoing floating volatility patterns of Fuel Tech and Vow ASA.
Diversification Opportunities for Fuel Tech and Vow ASA
Excellent diversification
The 3 months correlation between Fuel and Vow is -0.6. Overlapping area represents the amount of risk that can be diversified away by holding Fuel Tech and Vow ASA in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Vow ASA 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 Vow ASA. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Vow ASA has no effect on the direction of Fuel Tech i.e., Fuel Tech and Vow ASA go up and down completely randomly.
Pair Corralation between Fuel Tech and Vow ASA
Given the investment horizon of 90 days Fuel Tech is expected to generate 0.43 times more return on investment than Vow ASA. However, Fuel Tech is 2.34 times less risky than Vow ASA. It trades about -0.02 of its potential returns per unit of risk. Vow ASA is currently generating about -0.05 per unit of risk. If you would invest 135.00 in Fuel Tech on September 1, 2024 and sell it today you would lose (28.00) from holding Fuel Tech or give up 20.74% of portfolio value over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Weak |
| Accuracy | 99.73% |
| Values | Daily Returns |
Fuel Tech vs. Vow ASA
Performance |
| Timeline |
| Fuel Tech |
| Vow ASA |
Fuel Tech and Vow ASA Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Fuel Tech and Vow ASA
The main advantage of trading using opposite Fuel Tech and Vow ASA positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Fuel Tech position performs unexpectedly, Vow ASA 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 Vow ASA will offset losses from the drop in Vow ASA'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 |
| Vow ASA vs. Eestech | Vow ASA vs. Bion Environmental Technologies | Vow ASA vs. TOMI Environmental Solutions |
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 Stocks Directory module to find actively traded stocks across global markets.
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