Correlation Between Zurn Elkay and Energy
Can any of the company-specific risk be diversified away by investing in both Zurn Elkay and Energy 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 Zurn Elkay and Energy into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Zurn Elkay Water and Energy and Water, you can compare the effects of market volatilities on Zurn Elkay and Energy 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 Zurn Elkay with a short position of Energy. Check out your portfolio center. Please also check ongoing floating volatility patterns of Zurn Elkay and Energy.
Diversification Opportunities for Zurn Elkay and Energy
-0.85 | Correlation Coefficient |
Pay attention - limited upside
The 3 months correlation between Zurn and Energy is -0.85. Overlapping area represents the amount of risk that can be diversified away by holding Zurn Elkay Water and Energy and Water in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Energy and Water and Zurn Elkay 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 Zurn Elkay Water are associated (or correlated) with Energy. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Energy and Water has no effect on the direction of Zurn Elkay i.e., Zurn Elkay and Energy go up and down completely randomly.
Pair Corralation between Zurn Elkay and Energy
Considering the 90-day investment horizon Zurn Elkay Water is expected to generate 0.09 times more return on investment than Energy. However, Zurn Elkay Water is 11.68 times less risky than Energy. It trades about 0.26 of its potential returns per unit of risk. Energy and Water is currently generating about -0.23 per unit of risk. If you would invest 3,462 in Zurn Elkay Water on August 26, 2024 and sell it today you would earn a total of 531.00 from holding Zurn Elkay Water or generate 15.34% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Significant |
| Accuracy | 100.0% |
| Values | Daily Returns |
Zurn Elkay Water vs. Energy and Water
Performance |
| Timeline |
| Zurn Elkay Water |
| Energy and Water |
Zurn Elkay and Energy Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Zurn Elkay and Energy
The main advantage of trading using opposite Zurn Elkay and Energy positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Zurn Elkay position performs unexpectedly, Energy 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 will offset losses from the drop in Energy's long position.| Zurn Elkay vs. Energy Recovery | Zurn Elkay vs. CECO Environmental Corp | Zurn Elkay vs. 374Water Common Stock | Zurn Elkay vs. Federal Signal |
| Energy vs. TOMI Environmental Solutions | Energy vs. Zurn Elkay Water | Energy vs. Federal Signal | Energy 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 Price Exposure Probability module to analyze equity upside and downside potential for a given time horizon across multiple markets.
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