Correlation Between Heritage Crystal and Federal Signal
Can any of the company-specific risk be diversified away by investing in both Heritage Crystal and Federal Signal 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 Heritage Crystal and Federal Signal into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Heritage Crystal Clean and Federal Signal, you can compare the effects of market volatilities on Heritage Crystal and Federal Signal 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 Heritage Crystal with a short position of Federal Signal. Check out your portfolio center. Please also check ongoing floating volatility patterns of Heritage Crystal and Federal Signal.
Diversification Opportunities for Heritage Crystal and Federal Signal
0.08 | Correlation Coefficient |
Significant diversification
The 3 months correlation between Heritage and Federal is 0.08. Overlapping area represents the amount of risk that can be diversified away by holding Heritage Crystal Clean and Federal Signal in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Federal Signal and Heritage Crystal 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 Heritage Crystal Clean are associated (or correlated) with Federal Signal. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Federal Signal has no effect on the direction of Heritage Crystal i.e., Heritage Crystal and Federal Signal go up and down completely randomly.
Pair Corralation between Heritage Crystal and Federal Signal
If you would invest 8,239 in Federal Signal on January 26, 2024 and sell it today you would earn a total of 94.00 from holding Federal Signal or generate 1.14% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Insignificant |
| Accuracy | 4.76% |
| Values | Daily Returns |
Heritage Crystal Clean vs. Federal Signal
Performance |
| Timeline |
| Heritage Crystal Clean |
Risk-Adjusted Performance
0 of 100
Weak | Strong |
Very Weak
| Federal Signal |
Heritage Crystal and Federal Signal Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Heritage Crystal and Federal Signal
The main advantage of trading using opposite Heritage Crystal and Federal Signal positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Heritage Crystal position performs unexpectedly, Federal Signal 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 Federal Signal will offset losses from the drop in Federal Signal's long position.| Heritage Crystal vs. Casella Waste Systems | Heritage Crystal vs. Stericycle | Heritage Crystal vs. Montrose Environmental Grp | Heritage Crystal vs. Clean Harbors |
| Federal Signal vs. Energy Recovery | Federal Signal vs. CECO Environmental Corp | Federal Signal vs. 374Water Common Stock | Federal Signal vs. CO2 Solutions |
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 Global Correlations module to find global opportunities by holding instruments from different markets.
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