Correlation Between Black Hills and CECO Environmental
Can any of the company-specific risk be diversified away by investing in both Black Hills 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 Black Hills and CECO Environmental into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Black Hills and CECO Environmental Corp, you can compare the effects of market volatilities on Black Hills 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 Black Hills with a short position of CECO Environmental. Check out your portfolio center. Please also check ongoing floating volatility patterns of Black Hills and CECO Environmental.
Diversification Opportunities for Black Hills and CECO Environmental
0.39 | Correlation Coefficient |
Weak diversification
The 3 months correlation between Black and CECO is 0.39. Overlapping area represents the amount of risk that can be diversified away by holding Black Hills and CECO Environmental Corp in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on CECO Environmental Corp and Black Hills 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 Black Hills 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 Corp has no effect on the direction of Black Hills i.e., Black Hills and CECO Environmental go up and down completely randomly.
Pair Corralation between Black Hills and CECO Environmental
Considering the 90-day investment horizon Black Hills is expected to generate 20.47 times less return on investment than CECO Environmental. But when comparing it to its historical volatility, Black Hills is 2.25 times less risky than CECO Environmental. It trades about 0.01 of its potential returns per unit of risk. CECO Environmental Corp is currently generating about 0.08 of returns per unit of risk over similar time horizon. If you would invest 1,180 in CECO Environmental Corp on August 28, 2024 and sell it today you would earn a total of 2,119 from holding CECO Environmental Corp or generate 179.58% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Very Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
Black Hills vs. CECO Environmental Corp
Performance |
| Timeline |
| Black Hills |
| CECO Environmental Corp |
Black Hills and CECO Environmental Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Black Hills and CECO Environmental
The main advantage of trading using opposite Black Hills and CECO Environmental positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Black Hills 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.| Black Hills vs. NorthWestern | Black Hills vs. Avista | Black Hills vs. Otter Tail | Black Hills vs. Companhia Paranaense de |
| CECO Environmental vs. Federal Signal | CECO Environmental vs. Zurn Elkay Water | CECO Environmental vs. Fuel Tech | CECO Environmental vs. CO2 Solutions |
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 Insider Screener module to find insiders across different sectors to evaluate their impact on performance.
Other Complementary Tools
| Portfolio Dashboard Portfolio dashboard that provides centralized access to all your investments | |
| FinTech Suite Use AI to screen and filter profitable investment opportunities | |
| Commodity Channel Use Commodity Channel Index to analyze current equity momentum | |
| Price Transformation Use Price Transformation models to analyze the depth of different equity instruments across global markets | |
| USA ETFs Find actively traded Exchange Traded Funds (ETF) in USA |