Correlation Between CECO Environmental and Bowhead Specialty
Can any of the company-specific risk be diversified away by investing in both CECO Environmental and Bowhead Specialty 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 Bowhead Specialty 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 Bowhead Specialty Holdings, you can compare the effects of market volatilities on CECO Environmental and Bowhead Specialty 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 Bowhead Specialty. Check out your portfolio center. Please also check ongoing floating volatility patterns of CECO Environmental and Bowhead Specialty.
Diversification Opportunities for CECO Environmental and Bowhead Specialty
0.34 | Correlation Coefficient |
Weak diversification
The 3 months correlation between CECO and Bowhead is 0.34. Overlapping area represents the amount of risk that can be diversified away by holding CECO Environmental Corp and Bowhead Specialty Holdings in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Bowhead Specialty 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 Bowhead Specialty. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Bowhead Specialty has no effect on the direction of CECO Environmental i.e., CECO Environmental and Bowhead Specialty go up and down completely randomly.
Pair Corralation between CECO Environmental and Bowhead Specialty
Given the investment horizon of 90 days CECO Environmental is expected to generate 1.13 times less return on investment than Bowhead Specialty. In addition to that, CECO Environmental is 1.38 times more volatile than Bowhead Specialty Holdings. It trades about 0.1 of its total potential returns per unit of risk. Bowhead Specialty Holdings is currently generating about 0.15 per unit of volatility. If you would invest 2,380 in Bowhead Specialty Holdings on August 31, 2024 and sell it today you would earn a total of 1,236 from holding Bowhead Specialty Holdings or generate 51.93% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Very Weak |
| Accuracy | 33.5% |
| Values | Daily Returns |
CECO Environmental Corp vs. Bowhead Specialty Holdings
Performance |
| Timeline |
| CECO Environmental Corp |
| Bowhead Specialty |
CECO Environmental and Bowhead Specialty Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with CECO Environmental and Bowhead Specialty
The main advantage of trading using opposite CECO Environmental and Bowhead Specialty positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if CECO Environmental position performs unexpectedly, Bowhead Specialty 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 Bowhead Specialty will offset losses from the drop in Bowhead Specialty's long position.| CECO Environmental vs. Federal Signal | CECO Environmental vs. Zurn Elkay Water | CECO Environmental vs. Fuel Tech | CECO Environmental vs. Energy Recovery |
| Bowhead Specialty vs. Axalta Coating Systems | Bowhead Specialty vs. Hawkins | Bowhead Specialty vs. Century Aluminum | Bowhead Specialty vs. CECO Environmental Corp |
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 Stock Tickers module to use high-impact, comprehensive, and customizable stock tickers that can be easily integrated to any websites.
Other Complementary Tools
| Portfolio Optimization Compute new portfolio that will generate highest expected return given your specified tolerance for risk | |
| Equity Valuation Check real value of public entities based on technical and fundamental data | |
| Efficient Frontier Plot and analyze your portfolio and positions against risk-return landscape of the market. | |
| Premium Stories Follow Macroaxis premium stories from verified contributors across different equity types, categories and coverage scope | |
| Economic Indicators Top statistical indicators that provide insights into how an economy is performing |