Correlation Between YASKAWA ELEC and Badger Meter

Can any of the company-specific risk be diversified away by investing in both YASKAWA ELEC and Badger Meter 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 YASKAWA ELEC and Badger Meter into the same portfolio, which is an essential part of the fundamental portfolio management process.

By analyzing existing cross correlation between YASKAWA ELEC UNSP and Badger Meter, you can compare the effects of market volatilities on YASKAWA ELEC and Badger Meter 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 YASKAWA ELEC with a short position of Badger Meter. Check out your portfolio center. Please also check ongoing floating volatility patterns of YASKAWA ELEC and Badger Meter.

Diversification Opportunities for YASKAWA ELEC and Badger Meter

0.7

Correlation Coefficient

YASKAWA ELEC  Badger Meter

Poor diversification

The 3 months correlation between YASKAWA and Badger is 0.7. Overlapping area represents the amount of risk that can be diversified away by holding YASKAWA ELEC UNSP and Badger Meter in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Badger Meter and YASKAWA ELEC 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 YASKAWA ELEC UNSP are associated (or correlated) with Badger Meter. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Badger Meter has no effect on the direction of YASKAWA ELEC i.e., YASKAWA ELEC and Badger Meter go up and down completely randomly.

Pair Corralation between YASKAWA ELEC and Badger Meter

Assuming the 90 days trading horizon YASKAWA ELEC is expected to generate 2.1 times less return on investment than Badger Meter. In addition to that, YASKAWA ELEC is 2.01 times more volatile than Badger Meter. It trades about 0.03 of its total potential returns per unit of risk. Badger Meter is currently generating about 0.15 per unit of volatility. If you would invest  18,025  in Badger Meter on April 22, 2025 and sell it today you would earn a total of  2,935  from holding Badger Meter or generate 16.28% return on investment over 90 days.

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

YASKAWA ELEC UNSP  vs.  Badger Meter

YASKAWA ELEC UNSP

Risk-Adjusted Performance

Weak

Compared to the overall equity markets, risk-adjusted returns on investments in YASKAWA ELEC UNSP are ranked lower than 2 (%) of all global equities and portfolios over the last 90 days. Despite nearly fragile fundamental indicators, YASKAWA ELEC may actually be approaching a critical reversion point that can send shares even higher in August 2025.

Badger Meter

Risk-Adjusted Performance

Good

Compared to the overall equity markets, risk-adjusted returns on investments in Badger Meter are ranked lower than 11 (%) of all global equities and portfolios over the last 90 days. Despite nearly uncertain basic indicators, Badger Meter reported solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with YASKAWA ELEC and Badger Meter

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

The idea behind YASKAWA ELEC UNSP and Badger Meter 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 Efficient Frontier module to plot and analyze your portfolio and positions against risk-return landscape of the market..