Correlation Between Atmus Filtration and Zurn Elkay

Can any of the company-specific risk be diversified away by investing in both Atmus Filtration 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 Atmus Filtration and Zurn Elkay 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 Zurn Elkay Water, you can compare the effects of market volatilities on Atmus Filtration 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 Atmus Filtration with a short position of Zurn Elkay. Check out your portfolio center. Please also check ongoing floating volatility patterns of Atmus Filtration and Zurn Elkay.

Diversification Opportunities for Atmus Filtration and Zurn Elkay

0.89

Correlation Coefficient

Atmus Filtration  Zurn Elkay

Very poor diversification

The 3 months correlation between Atmus and Zurn is 0.89. Overlapping area represents the amount of risk that can be diversified away by holding Atmus Filtration Technologies 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 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 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 Atmus Filtration i.e., Atmus Filtration and Zurn Elkay go up and down completely randomly.

Pair Corralation between Atmus Filtration and Zurn Elkay

Given the investment horizon of 90 days Atmus Filtration Technologies is expected to under-perform the Zurn Elkay. But the stock apears to be less risky and, when comparing its historical volatility, Atmus Filtration Technologies is 1.06 times less risky than Zurn Elkay. The stock trades about -0.27 of its potential returns per unit of risk. The Zurn Elkay Water is currently generating about -0.16 of returns per unit of risk over similar time horizon. If you would invest  3,909  in Zurn Elkay Water on September 19, 2024 and sell it today you would lose (181.00) from holding Zurn Elkay Water or give up 4.63% of portfolio value over 90 days.

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

Atmus Filtration Technologies  vs.  Zurn Elkay Water

Atmus Filtration Tec

Risk-Adjusted Performance

6 of 100

Modest

Compared to the overall equity markets, risk-adjusted returns on investments in Atmus Filtration Technologies are ranked lower than 6 (%) of all global equities and portfolios over the last 90 days. In spite of comparatively abnormal primary indicators, Atmus Filtration may actually be approaching a critical reversion point that can send shares even higher in January 2025.

Zurn Elkay Water

Risk-Adjusted Performance

6 of 100

Modest

Compared to the overall equity markets, risk-adjusted returns on investments in Zurn Elkay Water are ranked lower than 6 (%) of all global equities and portfolios over the last 90 days. In spite of comparatively inconsistent basic indicators, Zurn Elkay may actually be approaching a critical reversion point that can send shares even higher in January 2025.

Pair Trading with Atmus Filtration and Zurn Elkay

The main advantage of trading using opposite Atmus Filtration and Zurn Elkay positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Atmus Filtration 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 Atmus Filtration Technologies 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 My Watchlist Analysis module to analyze my current watchlist and to refresh optimization strategy. Macroaxis watchlist is based on self-learning algorithm to remember stocks you like.