Correlation Between Federal Signal and EAU TECHNOLOGIES

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

Diversification Opportunities for Federal Signal and EAU TECHNOLOGIES

0.0
  Correlation Coefficient

Pay attention - limited upside

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

Pair Corralation between Federal Signal and EAU TECHNOLOGIES

Considering the 90-day investment horizon Federal Signal Corp is expected to under-perform the EAU TECHNOLOGIES. But the stock apears to be less risky and, when comparing its historical volatility, Federal Signal Corp is 38.08 times less risky than EAU TECHNOLOGIES. The stock trades about -0.02 of its potential returns per unit of risk. The EAU TECHNOLOGIES INC is currently generating about 0.06 of returns per unit of risk over similar time horizon. If you would invest  3.00  in EAU TECHNOLOGIES INC on April 5, 2022 and sell it today you would lose (2.90)  from holding EAU TECHNOLOGIES INC or give up 96.67% of portfolio value over 90 days.
Time Period3 Months [change]
DirectionFlat 
StrengthInsignificant
Accuracy100.0%
ValuesDaily Returns

Federal Signal Corp  vs.  EAU TECHNOLOGIES INC

 Performance (%) 
      Timeline 
Federal Signal Corp 
Federal Performance
5 of 100
Compared to the overall equity markets, risk-adjusted returns on investments in Federal Signal Corp are ranked lower than 5 (%) of all global equities and portfolios over the last 90 days. Even with relatively weak basic indicators, Federal Signal may actually be approaching a critical reversion point that can send shares even higher in August 2022.

Structure and Payout Changes

Forward Annual Dividend Yield
0.0101
Payout Ratio
0.21
Last Split Factor
4:3
Forward Annual Dividend Rate
0.36
Dividend Date
2022-06-03
Ex Dividend Date
2022-05-19
Last Split Date
1994-03-02

Federal Price Channel

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 current stock price disturbance, may contribute to mid-run losses for the stockholders.

EAU TECHNOLOGIES Price Channel

Federal Signal and EAU TECHNOLOGIES Volatility Contrast

 Predicted Return Density 
      Returns 

Pair Trading with Federal Signal and EAU TECHNOLOGIES

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

EAU TECHNOLOGIES INC

Pair trading matchups for EAU TECHNOLOGIES

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 Fundamentals Comparison module to compare fundamentals across multiple equities to find investing opportunities.

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