Correlation Between Zurn Elkay and CleanCore Solutions

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

Diversification Opportunities for Zurn Elkay and CleanCore Solutions

0.19

Correlation Coefficient

Zurn Elkay  CleanCore Solutions

Average diversification

The 3 months correlation between Zurn and CleanCore is 0.19. Overlapping area represents the amount of risk that can be diversified away by holding Zurn Elkay Water and CleanCore Solutions in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on CleanCore Solutions 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 CleanCore Solutions. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of CleanCore Solutions has no effect on the direction of Zurn Elkay i.e., Zurn Elkay and CleanCore Solutions go up and down completely randomly.

Pair Corralation between Zurn Elkay and CleanCore Solutions

Considering the 90-day investment horizon Zurn Elkay Water is expected to generate 0.11 times more return on investment than CleanCore Solutions. However, Zurn Elkay Water is 8.89 times less risky than CleanCore Solutions. It trades about 0.01 of its potential returns per unit of risk. CleanCore Solutions is currently generating about -0.06 per unit of risk. If you would invest  3,892  in Zurn Elkay Water on September 20, 2024 and sell it today you would earn a total of  6.00  from holding Zurn Elkay Water or generate 0.15% return on investment over 90 days.

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

Zurn Elkay Water  vs.  CleanCore Solutions

Zurn Elkay Water

Risk-Adjusted Performance

12 of 100

Good

Compared to the overall equity markets, risk-adjusted returns on investments in Zurn Elkay Water are ranked lower than 12 (%) 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.

CleanCore Solutions

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days CleanCore Solutions has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of fragile performance in the last few months, the Stock's basic indicators remain rather sound which may send shares a bit higher in January 2025. The latest tumult may also be a sign of longer-term up-swing for the firm shareholders.

Pair Trading with Zurn Elkay and CleanCore Solutions

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

The idea behind Zurn Elkay Water and CleanCore Solutions 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.

Check out your portfolio center.

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 File Import module to quickly import all of your third-party portfolios from your local drive in csv format.