Correlation Between Energy Recovery and Albany International

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

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

Diversification Opportunities for Energy Recovery and Albany International

-0.14

Correlation Coefficient

Energy Recovery  Albany International

Good diversification

The 3 months correlation between Energy and Albany is -0.14. Overlapping area represents the amount of risk that can be diversified away by holding Energy Recovery and Albany International in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Albany International and Energy Recovery 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 Energy Recovery are associated (or correlated) with Albany International. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Albany International has no effect on the direction of Energy Recovery i.e., Energy Recovery and Albany International go up and down completely randomly.

Pair Corralation between Energy Recovery and Albany International

Given the investment horizon of 90 days Energy Recovery is expected to under-perform the Albany International. But the stock apears to be less risky and, when comparing its historical volatility, Energy Recovery is 1.06 times less risky than Albany International. The stock trades about -0.06 of its potential returns per unit of risk. The Albany International is currently generating about -0.04 of returns per unit of risk over similar time horizon. If you would invest  6,342  in Albany International on May 6, 2025 and sell it today you would lose (754.00) from holding Albany International or give up 11.89% of portfolio value over 90 days.

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

Energy Recovery  vs.  Albany International

Energy Recovery

Risk-Adjusted Performance

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.

Albany International

Risk-Adjusted Performance

Very Weak

Over the last 90 days Albany International has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of latest inconsistent performance, the Stock's forward indicators remain healthy and the recent disarray on Wall Street may also be a sign of long period gains for the firm investors.

Pair Trading with Energy Recovery and Albany International

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

The idea behind Energy Recovery and Albany International 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 Positions Ratings module to determine portfolio positions ratings based on digital equity recommendations. Macroaxis instant position ratings are based on combination of fundamental analysis and risk-adjusted market performance.