Correlation Between Zurn Elkay and Energy Recovery
Can any of the company-specific risk be diversified away by investing in both Zurn Elkay 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 Zurn Elkay and Energy Recovery 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 Recovery, you can compare the effects of market volatilities on Zurn Elkay 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 Zurn Elkay with a short position of Energy Recovery. Check out your portfolio center. Please also check ongoing floating volatility patterns of Zurn Elkay and Energy Recovery.
Diversification Opportunities for Zurn Elkay and Energy Recovery
0.6 | Correlation Coefficient |
Poor diversification
The 3 months correlation between Zurn and Energy is 0.6. Overlapping area represents the amount of risk that can be diversified away by holding Zurn Elkay Water and Energy Recovery in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Energy Recovery 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 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 Zurn Elkay i.e., Zurn Elkay and Energy Recovery go up and down completely randomly.
Pair Corralation between Zurn Elkay and Energy Recovery
Considering the 90-day investment horizon Zurn Elkay Water is expected to generate 0.58 times more return on investment than Energy Recovery. However, Zurn Elkay Water is 1.73 times less risky than Energy Recovery. It trades about 0.06 of its potential returns per unit of risk. Energy Recovery is currently generating about -0.01 per unit of risk. If you would invest 2,437 in Zurn Elkay Water on August 23, 2024 and sell it today you would earn a total of 1,498 from holding Zurn Elkay Water or generate 61.47% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Significant |
| Accuracy | 100.0% |
| Values | Daily Returns |
Zurn Elkay Water vs. Energy Recovery
Performance |
| Timeline |
| Zurn Elkay Water |
| Energy Recovery |
Zurn Elkay and Energy Recovery Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Zurn Elkay and Energy Recovery
The main advantage of trading using opposite Zurn Elkay and Energy Recovery positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Zurn Elkay 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.| Zurn Elkay vs. Energy Recovery | Zurn Elkay vs. CECO Environmental Corp | Zurn Elkay vs. 374Water Common Stock | Zurn Elkay vs. Federal Signal |
| 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 Portfolio Suggestion module to get suggestions outside of your existing asset allocation including your own model portfolios.
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