Correlation Between NIPPON PROLOGIS and CECO ENVIRONMENTAL
Can any of the company-specific risk be diversified away by investing in both NIPPON PROLOGIS and CECO ENVIRONMENTAL 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 NIPPON PROLOGIS and CECO ENVIRONMENTAL into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between NIPPON PROLOGIS REIT and CECO ENVIRONMENTAL, you can compare the effects of market volatilities on NIPPON PROLOGIS and CECO ENVIRONMENTAL 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 NIPPON PROLOGIS with a short position of CECO ENVIRONMENTAL. Check out your portfolio center. Please also check ongoing floating volatility patterns of NIPPON PROLOGIS and CECO ENVIRONMENTAL.
Diversification Opportunities for NIPPON PROLOGIS and CECO ENVIRONMENTAL
-0.45 | Correlation Coefficient |
Very good diversification
The 3 months correlation between NIPPON and CECO is -0.45. Overlapping area represents the amount of risk that can be diversified away by holding NIPPON PROLOGIS REIT and CECO ENVIRONMENTAL in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on CECO ENVIRONMENTAL and NIPPON PROLOGIS 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 NIPPON PROLOGIS REIT are associated (or correlated) with CECO ENVIRONMENTAL. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of CECO ENVIRONMENTAL has no effect on the direction of NIPPON PROLOGIS i.e., NIPPON PROLOGIS and CECO ENVIRONMENTAL go up and down completely randomly.
Pair Corralation between NIPPON PROLOGIS and CECO ENVIRONMENTAL
Assuming the 90 days trading horizon NIPPON PROLOGIS REIT is expected to under-perform the CECO ENVIRONMENTAL. But the stock apears to be less risky and, when comparing its historical volatility, NIPPON PROLOGIS REIT is 2.14 times less risky than CECO ENVIRONMENTAL. The stock trades about -0.03 of its potential returns per unit of risk. The CECO ENVIRONMENTAL is currently generating about 0.06 of returns per unit of risk over similar time horizon. If you would invest 1,860 in CECO ENVIRONMENTAL on November 8, 2024 and sell it today you would earn a total of 872.00 from holding CECO ENVIRONMENTAL or generate 46.88% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Very Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
NIPPON PROLOGIS REIT vs. CECO ENVIRONMENTAL
Performance |
| Timeline |
| NIPPON PROLOGIS REIT |
| CECO ENVIRONMENTAL |
NIPPON PROLOGIS and CECO ENVIRONMENTAL Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with NIPPON PROLOGIS and CECO ENVIRONMENTAL
The main advantage of trading using opposite NIPPON PROLOGIS and CECO ENVIRONMENTAL positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if NIPPON PROLOGIS position performs unexpectedly, CECO ENVIRONMENTAL 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 CECO ENVIRONMENTAL will offset losses from the drop in CECO ENVIRONMENTAL's long position.| NIPPON PROLOGIS vs. AIR LIQUIDE ADR | NIPPON PROLOGIS vs. Delta Air Lines | NIPPON PROLOGIS vs. CHINA SOUTHN AIR H | NIPPON PROLOGIS vs. Wizz Air Holdings |
| CECO ENVIRONMENTAL vs. Apple Inc | CECO ENVIRONMENTAL vs. Apple Inc | CECO ENVIRONMENTAL vs. Apple Inc | CECO ENVIRONMENTAL vs. Apple Inc |
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 Theme Ratings module to determine theme ratings based on digital equity recommendations. Macroaxis theme ratings are based on combination of fundamental analysis and risk-adjusted market performance.
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