Correlation Between EAU TECHNOLOGIES and Evoqua Water

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Can any of the company-specific risk be diversified away by investing in both EAU TECHNOLOGIES and Evoqua Water 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 EAU TECHNOLOGIES and Evoqua Water into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between EAU TECHNOLOGIES INC and Evoqua Water Technologies, you can compare the effects of market volatilities on EAU TECHNOLOGIES and Evoqua Water 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 EAU TECHNOLOGIES with a short position of Evoqua Water. Check out your portfolio center. Please also check ongoing floating volatility patterns of EAU TECHNOLOGIES and Evoqua Water.

Diversification Opportunities for EAU TECHNOLOGIES and Evoqua Water

0.0
  Correlation Coefficient

Pay attention - limited upside

The 3 months correlation between EAU TECHNOLOGIES and Evoqua is 0.0. Overlapping area represents the amount of risk that can be diversified away by holding EAU TECHNOLOGIES INC and Evoqua Water Technologies in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Evoqua Water Technologies and EAU TECHNOLOGIES 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 EAU TECHNOLOGIES INC are associated (or correlated) with Evoqua Water. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Evoqua Water Technologies has no effect on the direction of EAU TECHNOLOGIES i.e., EAU TECHNOLOGIES and Evoqua Water go up and down completely randomly.

Pair Corralation between EAU TECHNOLOGIES and Evoqua Water

Given the investment horizon of 90 days EAU TECHNOLOGIES INC is expected to generate 26.58 times more return on investment than Evoqua Water. However, EAU TECHNOLOGIES is 26.58 times more volatile than Evoqua Water Technologies. It trades about 0.06 of its potential returns per unit of risk. Evoqua Water Technologies is currently generating about 0.01 per unit of risk. If you would invest  2.00  in EAU TECHNOLOGIES INC on March 31, 2022 and sell it today you would lose (1.90)  from holding EAU TECHNOLOGIES INC or give up 95.0% of portfolio value over 90 days.
Time Period3 Months [change]
DirectionFlat 
StrengthInsignificant
Accuracy99.63%
ValuesDaily Returns

EAU TECHNOLOGIES INC  vs.  Evoqua Water Technologies

 Performance (%) 
      Timeline 
EAU TECHNOLOGIES INC 
EAU TECHNOLOGIES Performance
0 of 100
Over the last 90 days EAU TECHNOLOGIES INC has generated negative risk-adjusted returns adding no value to investors with long positions. Despite nearly stable basic indicators, EAU TECHNOLOGIES is not utilizing all of its potentials. The latest stock price disturbance, may contribute to mid-run losses for the stockholders.

EAU TECHNOLOGIES Price Channel

Evoqua Water Technologies 
Evoqua Performance
0 of 100
Over the last 90 days Evoqua Water Technologies has generated negative risk-adjusted returns adding no value to investors with long positions. Despite unsteady performance in the last few months, the Stock's basic indicators remain somewhat strong which may send shares a bit higher in July 2022. The current disturbance may also be a sign of long term up-swing for the company investors.

Structure and Payout Changes

Last Split Factor
1:2
Last Split Date
2011-05-10

Evoqua Price Channel

EAU TECHNOLOGIES and Evoqua Water Volatility Contrast

 Predicted Return Density 
      Returns 

Pair Trading with EAU TECHNOLOGIES and Evoqua Water

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

EAU TECHNOLOGIES INC

Pair trading matchups for EAU TECHNOLOGIES

The idea behind EAU TECHNOLOGIES INC and Evoqua Water Technologies 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.
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 Global Correlations module to find global opportunities by holding instruments from different markets.

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