Correlation Between 374Water Common and Aker Carbon
Can any of the company-specific risk be diversified away by investing in both 374Water Common and Aker Carbon 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 374Water Common and Aker Carbon into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between 374Water Common Stock and Aker Carbon Capture, you can compare the effects of market volatilities on 374Water Common and Aker Carbon 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 374Water Common with a short position of Aker Carbon. Check out your portfolio center. Please also check ongoing floating volatility patterns of 374Water Common and Aker Carbon.
Diversification Opportunities for 374Water Common and Aker Carbon
0.21 | Correlation Coefficient |
Modest diversification
The 3 months correlation between 374Water and Aker is 0.21. Overlapping area represents the amount of risk that can be diversified away by holding 374Water Common Stock and Aker Carbon Capture in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Aker Carbon Capture and 374Water Common 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 374Water Common Stock are associated (or correlated) with Aker Carbon. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Aker Carbon Capture has no effect on the direction of 374Water Common i.e., 374Water Common and Aker Carbon go up and down completely randomly.
Pair Corralation between 374Water Common and Aker Carbon
Given the investment horizon of 90 days 374Water Common Stock is expected to under-perform the Aker Carbon. In addition to that, 374Water Common is 1.83 times more volatile than Aker Carbon Capture. It trades about -0.33 of its total potential returns per unit of risk. Aker Carbon Capture is currently generating about -0.12 per unit of volatility. If you would invest 57.00 in Aker Carbon Capture on August 26, 2024 and sell it today you would lose (6.00) from holding Aker Carbon Capture or give up 10.53% of portfolio value over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Very Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
374Water Common Stock vs. Aker Carbon Capture
Performance |
| Timeline |
| 374Water Common Stock |
| Aker Carbon Capture |
374Water Common and Aker Carbon Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with 374Water Common and Aker Carbon
The main advantage of trading using opposite 374Water Common and Aker Carbon positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if 374Water Common position performs unexpectedly, Aker Carbon 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 Aker Carbon will offset losses from the drop in Aker Carbon's long position.| 374Water Common vs. Zurn Elkay Water | 374Water Common vs. Energy Recovery | 374Water Common vs. CECO Environmental Corp | 374Water Common vs. Federal Signal |
| Aker Carbon vs. TOMI Environmental Solutions | Aker Carbon vs. Zurn Elkay Water | Aker Carbon vs. Federal Signal | Aker Carbon 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 ETFs module to find actively traded Exchange Traded Funds (ETF) from around the world.
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