Correlation Between Cadre Holdings and Zurn Elkay

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

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

Diversification Opportunities for Cadre Holdings and Zurn Elkay

0.63

Correlation Coefficient

Cadre Holdings  Zurn Elkay

Poor diversification

The 3 months correlation between Cadre and Zurn is 0.63. Overlapping area represents the amount of risk that can be diversified away by holding Cadre Holdings 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 Cadre Holdings 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 Cadre Holdings 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 Cadre Holdings i.e., Cadre Holdings and Zurn Elkay go up and down completely randomly.

Pair Corralation between Cadre Holdings and Zurn Elkay

Given the investment horizon of 90 days Cadre Holdings is expected to generate 1.48 times more return on investment than Zurn Elkay. However, Cadre Holdings is 1.48 times more volatile than Zurn Elkay Water. It trades about -0.03 of its potential returns per unit of risk. Zurn Elkay Water is currently generating about -0.11 per unit of risk. If you would invest  3,197  in Cadre Holdings on December 27, 2024 and sell it today you would lose (160.00) from holding Cadre Holdings or give up 5.0% of portfolio value over 90 days.

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

Cadre Holdings  vs.  Zurn Elkay Water

Cadre Holdings

Risk-Adjusted Performance

Very Weak

Over the last 90 days Cadre Holdings has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of rather sound basic indicators, Cadre Holdings is not utilizing all of its potentials. The current stock price tumult, may contribute to shorter-term losses for the shareholders.

Zurn Elkay Water

Risk-Adjusted Performance

Very Weak

Over the last 90 days Zurn Elkay Water has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of latest inconsistent performance, the Stock's basic indicators remain stable and the newest uproar on Wall Street may also be a sign of mid-term gains for the firm private investors.

Pair Trading with Cadre Holdings and Zurn Elkay

The main advantage of trading using opposite Cadre Holdings and Zurn Elkay positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Cadre Holdings 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 Cadre Holdings 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 Commodity Directory module to find actively traded commodities issued by global exchanges.