Correlation Between Fuel Tech and TOMI Environmental
Can any of the company-specific risk be diversified away by investing in both Fuel Tech and TOMI Environmental 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 TOMI Environmental into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Fuel Tech and TOMI Environmental Solutions, you can compare the effects of market volatilities on Fuel Tech and TOMI Environmental 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 TOMI Environmental. Check out your portfolio center. Please also check ongoing floating volatility patterns of Fuel Tech and TOMI Environmental.
Diversification Opportunities for Fuel Tech and TOMI Environmental
-0.23 | Correlation Coefficient |
Very good diversification
The 3 months correlation between Fuel and TOMI is -0.23. Overlapping area represents the amount of risk that can be diversified away by holding Fuel Tech and TOMI Environmental Solutions in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on TOMI Environmental 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 TOMI Environmental. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of TOMI Environmental has no effect on the direction of Fuel Tech i.e., Fuel Tech and TOMI Environmental go up and down completely randomly.
Pair Corralation between Fuel Tech and TOMI Environmental
Given the investment horizon of 90 days Fuel Tech is expected to under-perform the TOMI Environmental. But the stock apears to be less risky and, when comparing its historical volatility, Fuel Tech is 2.15 times less risky than TOMI Environmental. The stock trades about -0.01 of its potential returns per unit of risk. The TOMI Environmental Solutions is currently generating about 0.05 of returns per unit of risk over similar time horizon. If you would invest 58.00 in TOMI Environmental Solutions on November 1, 2024 and sell it today you would earn a total of 40.52 from holding TOMI Environmental Solutions or generate 69.86% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Insignificant |
| Accuracy | 100.0% |
| Values | Daily Returns |
Fuel Tech vs. TOMI Environmental Solutions
Performance |
| Timeline |
| Fuel Tech |
| TOMI Environmental |
Fuel Tech and TOMI Environmental Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Fuel Tech and TOMI Environmental
The main advantage of trading using opposite Fuel Tech and TOMI Environmental positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Fuel Tech position performs unexpectedly, TOMI Environmental 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 TOMI Environmental will offset losses from the drop in TOMI Environmental'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 |
| TOMI Environmental vs. Decision Diagnostics | TOMI Environmental vs. Kronos Advanced Technologies | TOMI Environmental vs. GeoVax Labs | TOMI Environmental vs. Creative Realities |
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 Instant Ratings module to determine any equity ratings based on digital recommendations. Macroaxis instant equity ratings are based on combination of fundamental analysis and risk-adjusted market performance.
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