Correlation Between Evoqua Water and Delta CleanTech

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

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

Diversification Opportunities for Evoqua Water and Delta CleanTech

0.0

Correlation Coefficient

Evoqua Water  Delta CleanTech

Pay attention - limited upside

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

Pair Corralation between Evoqua Water and Delta CleanTech

If you would invest  2.25  in Delta CleanTech on December 29, 2024 and sell it today you would earn a total of  1.11  from holding Delta CleanTech or generate 49.33% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Flat
Strength	Insignificant
Accuracy	0.0%
Values	Daily Returns

Evoqua Water Technologies  vs.  Delta CleanTech

Evoqua Water Technologies

Risk-Adjusted Performance

Very Weak

Over the last 90 days Evoqua Water Technologies has generated negative risk-adjusted returns adding no value to investors with long positions. Despite somewhat strong basic indicators, Evoqua Water is not utilizing all of its potentials. The newest stock price disturbance, may contribute to short-term losses for the investors.

Delta CleanTech

Risk-Adjusted Performance

Good

Compared to the overall equity markets, risk-adjusted returns on investments in Delta CleanTech are ranked lower than 11 (%) of all global equities and portfolios over the last 90 days. Despite nearly fragile forward indicators, Delta CleanTech reported solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with Evoqua Water and Delta CleanTech

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

The idea behind Evoqua Water Technologies and Delta CleanTech 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 ETFs module to find actively traded Exchange Traded Funds (ETF) from around the world.