Correlation Between Federal Signal and Heritage Crystal
Can any of the company-specific risk be diversified away by investing in both Federal Signal and Heritage Crystal 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 Federal Signal and Heritage Crystal into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Federal Signal and Heritage Crystal Clean, you can compare the effects of market volatilities on Federal Signal and Heritage Crystal 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 Federal Signal with a short position of Heritage Crystal. Check out your portfolio center. Please also check ongoing floating volatility patterns of Federal Signal and Heritage Crystal.
Diversification Opportunities for Federal Signal and Heritage Crystal
0.08 | Correlation Coefficient |
Significant diversification
The 3 months correlation between Federal and Heritage is 0.08. Overlapping area represents the amount of risk that can be diversified away by holding Federal Signal and Heritage Crystal Clean in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Heritage Crystal Clean and Federal Signal 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 Federal Signal are associated (or correlated) with Heritage Crystal. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Heritage Crystal Clean has no effect on the direction of Federal Signal i.e., Federal Signal and Heritage Crystal go up and down completely randomly.
Pair Corralation between Federal Signal and Heritage Crystal
If you would invest 8,188 in Federal Signal on January 25, 2024 and sell it today you would earn a total of 145.00 from holding Federal Signal or generate 1.77% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Insignificant |
| Accuracy | 4.55% |
| Values | Daily Returns |
Federal Signal vs. Heritage Crystal Clean
Performance |
| Timeline |
| Federal Signal |
| Heritage Crystal Clean |
Risk-Adjusted Performance
0 of 100
Weak | Strong |
Very Weak
Federal Signal and Heritage Crystal Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Federal Signal and Heritage Crystal
The main advantage of trading using opposite Federal Signal and Heritage Crystal positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Federal Signal position performs unexpectedly, Heritage Crystal 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 Heritage Crystal will offset losses from the drop in Heritage Crystal's long position.| Federal Signal vs. Energy Recovery | Federal Signal vs. CECO Environmental Corp | Federal Signal vs. 374Water Common Stock | Federal Signal vs. CO2 Solutions |
| Heritage Crystal vs. Casella Waste Systems | Heritage Crystal vs. Stericycle | Heritage Crystal vs. Montrose Environmental Grp | Heritage Crystal vs. Clean Harbors |
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 Crypto Correlations module to use cryptocurrency correlation module to diversify your cryptocurrency portfolio across multiple coins.
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