Correlation Between CECO Environmental and Above Food
Can any of the company-specific risk be diversified away by investing in both CECO Environmental and Above Food 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 CECO Environmental and Above Food into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between CECO Environmental Corp and Above Food Ingredients, you can compare the effects of market volatilities on CECO Environmental and Above Food 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 CECO Environmental with a short position of Above Food. Check out your portfolio center. Please also check ongoing floating volatility patterns of CECO Environmental and Above Food.
Diversification Opportunities for CECO Environmental and Above Food
0.47 | Correlation Coefficient |
Very weak diversification
The 3 months correlation between CECO and Above is 0.47. Overlapping area represents the amount of risk that can be diversified away by holding CECO Environmental Corp and Above Food Ingredients in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Above Food Ingredients and CECO Environmental 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 CECO Environmental Corp are associated (or correlated) with Above Food. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Above Food Ingredients has no effect on the direction of CECO Environmental i.e., CECO Environmental and Above Food go up and down completely randomly.
Pair Corralation between CECO Environmental and Above Food
Given the investment horizon of 90 days CECO Environmental Corp is expected to generate 0.4 times more return on investment than Above Food. However, CECO Environmental Corp is 2.53 times less risky than Above Food. It trades about 0.08 of its potential returns per unit of risk. Above Food Ingredients is currently generating about -0.07 per unit of risk. If you would invest 1,383 in CECO Environmental Corp on October 23, 2024 and sell it today you would earn a total of 1,577 from holding CECO Environmental Corp or generate 114.03% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Weak |
| Accuracy | 81.28% |
| Values | Daily Returns |
CECO Environmental Corp vs. Above Food Ingredients
Performance |
| Timeline |
| CECO Environmental Corp |
| Above Food Ingredients |
CECO Environmental and Above Food Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with CECO Environmental and Above Food
The main advantage of trading using opposite CECO Environmental and Above Food positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if CECO Environmental position performs unexpectedly, Above Food 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 Above Food will offset losses from the drop in Above Food's long position.| CECO Environmental vs. Federal Signal | CECO Environmental vs. Zurn Elkay Water | CECO Environmental vs. Fuel Tech | CECO Environmental vs. Energy Recovery |
| Above Food vs. Kingdee International Software | Above Food vs. Where Food Comes | Above Food vs. Q2 Holdings | Above Food vs. ServiceNow |
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 Commodity Channel module to use Commodity Channel Index to analyze current equity momentum.
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