Correlation Between CEA Industries and AGCO
Can any of the company-specific risk be diversified away by investing in both CEA Industries and AGCO 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 CEA Industries and AGCO into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between CEA Industries Warrant and AGCO Corporation, you can compare the effects of market volatilities on CEA Industries and AGCO 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 CEA Industries with a short position of AGCO. Check out your portfolio center. Please also check ongoing floating volatility patterns of CEA Industries and AGCO.
Diversification Opportunities for CEA Industries and AGCO
-0.31 | Correlation Coefficient |
Very good diversification
The 3 months correlation between CEA and AGCO is -0.31. Overlapping area represents the amount of risk that can be diversified away by holding CEA Industries Warrant and AGCO Corp. in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on AGCO and CEA Industries 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 CEA Industries Warrant are associated (or correlated) with AGCO. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of AGCO has no effect on the direction of CEA Industries i.e., CEA Industries and AGCO go up and down completely randomly.
Pair Corralation between CEA Industries and AGCO
Assuming the 90 days horizon CEA Industries Warrant is expected to generate 6.5 times more return on investment than AGCO. However, CEA Industries is 6.5 times more volatile than AGCO Corporation. It trades about 0.54 of its potential returns per unit of risk. AGCO Corporation is currently generating about 0.01 per unit of risk. If you would invest 0.85 in CEA Industries Warrant on August 28, 2024 and sell it today you would earn a total of 0.35 from holding CEA Industries Warrant or generate 41.18% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Insignificant |
| Accuracy | 19.05% |
| Values | Daily Returns |
CEA Industries Warrant vs. AGCO Corp.
Performance |
| Timeline |
| CEA Industries Warrant |
Risk-Adjusted Performance
0 of 100
Weak | Strong |
Solid
| AGCO |
CEA Industries and AGCO Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with CEA Industries and AGCO
The main advantage of trading using opposite CEA Industries and AGCO positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if CEA Industries position performs unexpectedly, AGCO 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 AGCO will offset losses from the drop in AGCO's long position.| CEA Industries vs. CEA Industries | CEA Industries vs. Thayer Ventures Acquisition | CEA Industries vs. Iveda Solutions Warrant |
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 Competition Analyzer module to analyze and compare many basic indicators for a group of related or unrelated entities.
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