Correlation Between CEA Industries and Lindsay
Can any of the company-specific risk be diversified away by investing in both CEA Industries and Lindsay 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 Lindsay 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 Lindsay, you can compare the effects of market volatilities on CEA Industries and Lindsay 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 Lindsay. Check out your portfolio center. Please also check ongoing floating volatility patterns of CEA Industries and Lindsay.
Diversification Opportunities for CEA Industries and Lindsay
0.15 | Correlation Coefficient |
Average diversification
The 3 months correlation between CEA and Lindsay is 0.15. Overlapping area represents the amount of risk that can be diversified away by holding CEA Industries Warrant and Lindsay in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Lindsay 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 Lindsay. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Lindsay has no effect on the direction of CEA Industries i.e., CEA Industries and Lindsay go up and down completely randomly.
Pair Corralation between CEA Industries and Lindsay
Assuming the 90 days horizon CEA Industries Warrant is expected to generate 33.66 times more return on investment than Lindsay. However, CEA Industries is 33.66 times more volatile than Lindsay. It trades about 0.14 of its potential returns per unit of risk. Lindsay is currently generating about 0.29 per unit of risk. If you would invest 1.27 in CEA Industries Warrant on October 20, 2024 and sell it today you would lose (0.28) from holding CEA Industries Warrant or give up 22.05% of portfolio value over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Insignificant |
| Accuracy | 95.0% |
| Values | Daily Returns |
CEA Industries Warrant vs. Lindsay
Performance |
| Timeline |
| CEA Industries Warrant |
| Lindsay |
CEA Industries and Lindsay Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with CEA Industries and Lindsay
The main advantage of trading using opposite CEA Industries and Lindsay positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if CEA Industries position performs unexpectedly, Lindsay 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 Lindsay will offset losses from the drop in Lindsay's long position.| CEA Industries vs. CEA Industries | CEA Industries vs. Thayer Ventures Acquisition | CEA Industries vs. Iveda Solutions Warrant |
| Lindsay vs. Columbus McKinnon | Lindsay vs. Astec Industries | Lindsay vs. Shyft Group | Lindsay vs. AGCO Corporation |
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 Odds Of Bankruptcy module to get analysis of equity chance of financial distress in the next 2 years.
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