Correlation Between Evoqua Water and Umicore SA

Can any of the company-specific risk be diversified away by investing in both Evoqua Water and Umicore SA 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 Umicore SA 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 Umicore SA, you can compare the effects of market volatilities on Evoqua Water and Umicore SA 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 Umicore SA. Check out your portfolio center. Please also check ongoing floating volatility patterns of Evoqua Water and Umicore SA.

Diversification Opportunities for Evoqua Water and Umicore SA

-0.4

Correlation Coefficient

Evoqua Water  Umicore SA

Very good diversification

The 3 months correlation between Evoqua and Umicore is -0.4. Overlapping area represents the amount of risk that can be diversified away by holding Evoqua Water Technologies and Umicore SA in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Umicore SA 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 Umicore SA. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Umicore SA has no effect on the direction of Evoqua Water i.e., Evoqua Water and Umicore SA go up and down completely randomly.

Pair Corralation between Evoqua Water and Umicore SA

If you would invest  4,988  in Evoqua Water Technologies on October 24, 2024 and sell it today you would earn a total of  0.00  from holding Evoqua Water Technologies or generate 0.0% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Against
Strength	Very Weak
Accuracy	1.69%
Values	Daily Returns

Evoqua Water Technologies  vs.  Umicore SA

Evoqua Water Technologies

Risk-Adjusted Performance

0 of 100

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.

Umicore SA

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Umicore SA has generated negative risk-adjusted returns adding no value to investors with long positions. Despite latest inconsistent performance, the Stock's fundamental indicators remain stable and the current disturbance on Wall Street may also be a sign of long-run gains for the company stockholders.

Pair Trading with Evoqua Water and Umicore SA

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

The idea behind Evoqua Water Technologies and Umicore SA 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 Odds Of Bankruptcy module to get analysis of equity chance of financial distress in the next 2 years.