Correlation Between Umicore SA and Energy Recovery
Can any of the company-specific risk be diversified away by investing in both Umicore SA and Energy Recovery 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 Umicore SA and Energy Recovery into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Umicore SA and Energy Recovery, you can compare the effects of market volatilities on Umicore SA and Energy Recovery 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 Umicore SA with a short position of Energy Recovery. Check out your portfolio center. Please also check ongoing floating volatility patterns of Umicore SA and Energy Recovery.
Diversification Opportunities for Umicore SA and Energy Recovery
0.22 | Correlation Coefficient |
Modest diversification
The 3 months correlation between Umicore and Energy is 0.22. Overlapping area represents the amount of risk that can be diversified away by holding Umicore SA and Energy Recovery in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Energy Recovery and Umicore SA 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 Umicore SA are associated (or correlated) with Energy Recovery. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Energy Recovery has no effect on the direction of Umicore SA i.e., Umicore SA and Energy Recovery go up and down completely randomly.
Pair Corralation between Umicore SA and Energy Recovery
Assuming the 90 days horizon Umicore SA is expected to generate 0.31 times more return on investment than Energy Recovery. However, Umicore SA is 3.24 times less risky than Energy Recovery. It trades about -0.31 of its potential returns per unit of risk. Energy Recovery is currently generating about -0.12 per unit of risk. If you would invest 1,225 in Umicore SA on August 31, 2024 and sell it today you would lose (128.00) from holding Umicore SA or give up 10.45% of portfolio value over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Very Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
Umicore SA vs. Energy Recovery
Performance |
| Timeline |
| Umicore SA |
| Energy Recovery |
Umicore SA and Energy Recovery Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Umicore SA and Energy Recovery
The main advantage of trading using opposite Umicore SA and Energy Recovery positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Umicore SA position performs unexpectedly, Energy Recovery 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 Energy Recovery will offset losses from the drop in Energy Recovery's long position.| Umicore SA vs. Energy Recovery | Umicore SA vs. CECO Environmental Corp | Umicore SA vs. Fuel Tech | Umicore SA vs. Atmus Filtration Technologies |
| Energy Recovery vs. Zurn Elkay Water | Energy Recovery vs. CECO Environmental Corp | Energy Recovery vs. 374Water Common Stock | Energy Recovery vs. Federal Signal |
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 Competition Analyzer module to analyze and compare many basic indicators for a group of related or unrelated entities.
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