Correlation Between Veralto and Aduro Clean

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

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

Diversification Opportunities for Veralto and Aduro Clean

0.46

Correlation Coefficient

Veralto  Aduro Clean

Very weak diversification

The 3 months correlation between Veralto and Aduro is 0.46. Overlapping area represents the amount of risk that can be diversified away by holding Veralto and Aduro Clean Technologies in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Aduro Clean Technologies and Veralto 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 Veralto are associated (or correlated) with Aduro Clean. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Aduro Clean Technologies has no effect on the direction of Veralto i.e., Veralto and Aduro Clean go up and down completely randomly.

Pair Corralation between Veralto and Aduro Clean

Given the investment horizon of 90 days Veralto is expected to generate 0.41 times more return on investment than Aduro Clean. However, Veralto is 2.45 times less risky than Aduro Clean. It trades about -0.05 of its potential returns per unit of risk. Aduro Clean Technologies is currently generating about -0.09 per unit of risk. If you would invest  10,190  in Veralto on December 29, 2024 and sell it today you would lose (401.00) from holding Veralto or give up 3.94% of portfolio value over 90 days.

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

Veralto  vs.  Aduro Clean Technologies

Veralto

Risk-Adjusted Performance

Very Weak

Over the last 90 days Veralto has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of very healthy basic indicators, Veralto is not utilizing all of its potentials. The latest stock price disarray, may contribute to short-term losses for the investors.

Aduro Clean Technologies

Risk-Adjusted Performance

Very Weak

Over the last 90 days Aduro Clean Technologies has generated negative risk-adjusted returns adding no value to investors with long positions. Even with weak performance in the last few months, the Stock's basic indicators remain relatively invariable which may send shares a bit higher in April 2025. The latest agitation may also be a sign of long-running up-swing for the enterprise retail investors.

Pair Trading with Veralto and Aduro Clean

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

The idea behind Veralto and Aduro Clean 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.

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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 Equity Valuation module to check real value of public entities based on technical and fundamental data.