Correlation Between Atmus Filtration and Energy Recovery

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

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

Diversification Opportunities for Atmus Filtration and Energy Recovery

-0.15

Correlation Coefficient

Atmus Filtration  Energy Recovery

Good diversification

The 3 months correlation between Atmus and Energy is -0.15. Overlapping area represents the amount of risk that can be diversified away by holding Atmus Filtration Technologies and Energy Recovery in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Energy Recovery and Atmus Filtration 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 Atmus Filtration Technologies are associated (or correlated) with Energy Recovery. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Energy Recovery has no effect on the direction of Atmus Filtration i.e., Atmus Filtration and Energy Recovery go up and down completely randomly.

Pair Corralation between Atmus Filtration and Energy Recovery

Given the investment horizon of 90 days Atmus Filtration Technologies is expected to under-perform the Energy Recovery. But the stock apears to be less risky and, when comparing its historical volatility, Atmus Filtration Technologies is 1.59 times less risky than Energy Recovery. The stock trades about -0.29 of its potential returns per unit of risk. The Energy Recovery is currently generating about -0.04 of returns per unit of risk over similar time horizon. If you would invest  1,550  in Energy Recovery on September 21, 2024 and sell it today you would lose (36.00) from holding Energy Recovery or give up 2.32% of portfolio value over 90 days.

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

Atmus Filtration Technologies  vs.  Energy Recovery

Atmus Filtration Tec

Risk-Adjusted Performance

5 of 100

Insignificant

Compared to the overall equity markets, risk-adjusted returns on investments in Atmus Filtration Technologies are ranked lower than 5 (%) of all global equities and portfolios over the last 90 days. In spite of comparatively inconsistent primary indicators, Atmus Filtration may actually be approaching a critical reversion point that can send shares even higher in January 2025.

Energy Recovery

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Energy Recovery has generated negative risk-adjusted returns adding no value to investors with long positions. Despite latest uncertain performance, the Stock's forward indicators remain strong and the recent confusion on Wall Street may also be a sign of long-lasting gains for the firm traders.

Pair Trading with Atmus Filtration and Energy Recovery

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

The idea behind Atmus Filtration Technologies and Energy Recovery 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 Portfolio Analyzer module to portfolio analysis module that provides access to portfolio diagnostics and optimization engine.