Correlation Between Delta CleanTech and Zurn Elkay

Can any of the company-specific risk be diversified away by investing in both Delta CleanTech and Zurn Elkay 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 Delta CleanTech and Zurn Elkay into the same portfolio, which is an essential part of the fundamental portfolio management process.

By analyzing existing cross correlation between Delta CleanTech and Zurn Elkay Water, you can compare the effects of market volatilities on Delta CleanTech and Zurn Elkay 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 Delta CleanTech with a short position of Zurn Elkay. Check out your portfolio center. Please also check ongoing floating volatility patterns of Delta CleanTech and Zurn Elkay.

Diversification Opportunities for Delta CleanTech and Zurn Elkay

0.3

Correlation Coefficient

Delta CleanTech  Zurn Elkay

Weak diversification

The 3 months correlation between Delta and Zurn is 0.3. Overlapping area represents the amount of risk that can be diversified away by holding Delta CleanTech and Zurn Elkay Water in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Zurn Elkay Water and Delta CleanTech 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 Delta CleanTech are associated (or correlated) with Zurn Elkay. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Zurn Elkay Water has no effect on the direction of Delta CleanTech i.e., Delta CleanTech and Zurn Elkay go up and down completely randomly.

Pair Corralation between Delta CleanTech and Zurn Elkay

Assuming the 90 days horizon Delta CleanTech is expected to generate 15.83 times more return on investment than Zurn Elkay. However, Delta CleanTech is 15.83 times more volatile than Zurn Elkay Water. It trades about 0.11 of its potential returns per unit of risk. Zurn Elkay Water is currently generating about 0.06 per unit of risk. If you would invest  1.71  in Delta CleanTech on February 19, 2024 and sell it today you would earn a total of  0.84  from holding Delta CleanTech or generate 49.12% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Together
Strength	Very Weak
Accuracy	100.0%
Values	Daily Returns

Delta CleanTech  vs.  Zurn Elkay Water

Delta CleanTech

Risk-Adjusted Performance

8 of 100

OK

Compared to the overall equity markets, risk-adjusted returns on investments in Delta CleanTech are ranked lower than 8 (%) of all global equities and portfolios over the last 90 days. Despite nearly weak forward indicators, Delta CleanTech reported solid returns over the last few months and may actually be approaching a breakup point.

Zurn Elkay Water

Risk-Adjusted Performance

4 of 100

Insignificant

Compared to the overall equity markets, risk-adjusted returns on investments in Zurn Elkay Water are ranked lower than 4 (%) of all global equities and portfolios over the last 90 days. In spite of comparatively stable basic indicators, Zurn Elkay is not utilizing all of its potentials. The newest stock price uproar, may contribute to short-horizon losses for the private investors.

Pair Trading with Delta CleanTech and Zurn Elkay

The main advantage of trading using opposite Delta CleanTech and Zurn Elkay positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Delta CleanTech position performs unexpectedly, Zurn Elkay 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 Zurn Elkay will offset losses from the drop in Zurn Elkay's long position.

The idea behind Delta CleanTech and Zurn Elkay Water pairs trading is to make the combined position market-neutral, meaning the overall market's direction will not affect its win or loss (or potential downside or upside). This can be achieved by designing a pairs trade with two highly correlated stocks or equities that operate in a similar space or sector, making it possible to obtain profits through simple and relatively low-risk investment.

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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 Bonds Directory module to find actively traded corporate debentures issued by US companies.