Correlation Between Zurn Elkay and Freeline Therapeutics

Can any of the company-specific risk be diversified away by investing in both Zurn Elkay and Freeline Therapeutics 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 Freeline Therapeutics 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 Freeline Therapeutics Holdings, you can compare the effects of market volatilities on Zurn Elkay and Freeline Therapeutics 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 Freeline Therapeutics. Check out your portfolio center. Please also check ongoing floating volatility patterns of Zurn Elkay and Freeline Therapeutics.

Diversification Opportunities for Zurn Elkay and Freeline Therapeutics

-0.42

Correlation Coefficient

Zurn Elkay  Freeline Therapeutics

Very good diversification

The 3 months correlation between Zurn and Freeline is -0.42. Overlapping area represents the amount of risk that can be diversified away by holding Zurn Elkay Water and Freeline Therapeutics Holdings in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Freeline Therapeutics 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 Freeline Therapeutics. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Freeline Therapeutics has no effect on the direction of Zurn Elkay i.e., Zurn Elkay and Freeline Therapeutics go up and down completely randomly.

Pair Corralation between Zurn Elkay and Freeline Therapeutics

If you would invest  431.00  in Freeline Therapeutics Holdings on September 24, 2024 and sell it today you would earn a total of  0.00  from holding Freeline Therapeutics Holdings or generate 0.0% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Against
Strength	Very Weak
Accuracy	4.76%
Values	Daily Returns

Zurn Elkay Water  vs.  Freeline Therapeutics Holdings

Zurn Elkay Water

Risk-Adjusted Performance

7 of 100

OK

Compared to the overall equity markets, risk-adjusted returns on investments in Zurn Elkay Water are ranked lower than 7 (%) 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.

Freeline Therapeutics

Risk-Adjusted Performance

0 of 100

Very Weak

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

Pair Trading with Zurn Elkay and Freeline Therapeutics

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

The idea behind Zurn Elkay Water and Freeline Therapeutics Holdings 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 Aroon Oscillator module to analyze current equity momentum using Aroon Oscillator and other momentum ratios.