Correlation Between Babcock Wilcox and CECO Environmental
Can any of the company-specific risk be diversified away by investing in both Babcock Wilcox 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 Babcock Wilcox and CECO Environmental into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Babcock Wilcox Enterprises and CECO Environmental Corp, you can compare the effects of market volatilities on Babcock Wilcox 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 Babcock Wilcox with a short position of CECO Environmental. Check out your portfolio center. Please also check ongoing floating volatility patterns of Babcock Wilcox and CECO Environmental.
Diversification Opportunities for Babcock Wilcox and CECO Environmental
-0.37 | Correlation Coefficient |
Very good diversification
The 3 months correlation between Babcock and CECO is -0.37. Overlapping area represents the amount of risk that can be diversified away by holding Babcock Wilcox Enterprises 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 Babcock Wilcox 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 Babcock Wilcox Enterprises 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 Babcock Wilcox i.e., Babcock Wilcox and CECO Environmental go up and down completely randomly.
Pair Corralation between Babcock Wilcox and CECO Environmental
Allowing for the 90-day total investment horizon Babcock Wilcox is expected to generate 10.48 times less return on investment than CECO Environmental. In addition to that, Babcock Wilcox is 2.06 times more volatile than CECO Environmental Corp. It trades about 0.0 of its total potential returns per unit of risk. CECO Environmental Corp is currently generating about 0.07 per unit of volatility. If you would invest 1,220 in CECO Environmental Corp on August 23, 2024 and sell it today you would earn a total of 1,800 from holding CECO Environmental Corp or generate 147.54% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Insignificant |
| Accuracy | 100.0% |
| Values | Daily Returns |
Babcock Wilcox Enterprises vs. CECO Environmental Corp
Performance |
| Timeline |
| Babcock Wilcox Enter |
| CECO Environmental Corp |
Babcock Wilcox and CECO Environmental Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Babcock Wilcox and CECO Environmental
The main advantage of trading using opposite Babcock Wilcox and CECO Environmental positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Babcock Wilcox 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.| Babcock Wilcox vs. Enerpac Tool Group | Babcock Wilcox vs. Gorman Rupp | Babcock Wilcox vs. Crane Company | Babcock Wilcox vs. Franklin Electric Co |
| CECO Environmental vs. Federal Signal | CECO Environmental vs. Zurn Elkay Water | CECO Environmental vs. Energy Recovery | CECO Environmental vs. 374Water Common Stock |
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 Idea Analyzer module to analyze all characteristics, volatility and risk-adjusted return of Macroaxis ideas.
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