Correlation Between Zurn Elkay and Umicore SA

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

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

Diversification Opportunities for Zurn Elkay and Umicore SA

0.08

Correlation Coefficient

Zurn Elkay  Umicore SA

Significant diversification

The 3 months correlation between Zurn and Umicore is 0.08. Overlapping area represents the amount of risk that can be diversified away by holding Zurn Elkay Water and Umicore SA in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Umicore SA and Zurn Elkay 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 Zurn Elkay Water 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 Zurn Elkay i.e., Zurn Elkay and Umicore SA go up and down completely randomly.

Pair Corralation between Zurn Elkay and Umicore SA

Considering the 90-day investment horizon Zurn Elkay Water is expected to generate 0.37 times more return on investment than Umicore SA. However, Zurn Elkay Water is 2.69 times less risky than Umicore SA. It trades about 0.08 of its potential returns per unit of risk. Umicore SA is currently generating about -0.04 per unit of risk. If you would invest  2,039  in Zurn Elkay Water on October 21, 2024 and sell it today you would earn a total of  1,779  from holding Zurn Elkay Water or generate 87.25% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Together
Strength	Insignificant
Accuracy	88.91%
Values	Daily Returns

Zurn Elkay Water  vs.  Umicore SA

Zurn Elkay Water

Risk-Adjusted Performance

4 of 100

Insignificant

Compared to the overall equity markets, risk-adjusted returns on investments in Zurn Elkay Water are ranked lower than 4 (%) of all global equities and portfolios over the last 90 days. In spite of comparatively stable basic indicators, Zurn Elkay is not utilizing all of its potentials. The recent stock price uproar, may contribute to short-horizon losses for the private 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 Zurn Elkay and Umicore SA

The main advantage of trading using opposite Zurn Elkay and Umicore SA positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Zurn Elkay 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 Zurn Elkay Water 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 Price Exposure Probability module to analyze equity upside and downside potential for a given time horizon across multiple markets.