Correlation Between CECO Environmental and BRP
Can any of the company-specific risk be diversified away by investing in both CECO Environmental and BRP 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 BRP 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 BRP Inc, you can compare the effects of market volatilities on CECO Environmental and BRP 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 BRP. Check out your portfolio center. Please also check ongoing floating volatility patterns of CECO Environmental and BRP.
Diversification Opportunities for CECO Environmental and BRP
-0.13 | Correlation Coefficient |
Good diversification
The 3 months correlation between CECO and BRP is -0.13. Overlapping area represents the amount of risk that can be diversified away by holding CECO Environmental Corp and BRP Inc in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on BRP Inc 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 BRP. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of BRP Inc has no effect on the direction of CECO Environmental i.e., CECO Environmental and BRP go up and down completely randomly.
Pair Corralation between CECO Environmental and BRP
Given the investment horizon of 90 days CECO Environmental Corp is expected to under-perform the BRP. In addition to that, CECO Environmental is 1.36 times more volatile than BRP Inc. It trades about -0.09 of its total potential returns per unit of risk. BRP Inc is currently generating about -0.04 per unit of volatility. If you would invest 5,223 in BRP Inc on October 11, 2024 and sell it today you would lose (114.00) from holding BRP Inc or give up 2.18% of portfolio value over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Insignificant |
| Accuracy | 100.0% |
| Values | Daily Returns |
CECO Environmental Corp vs. BRP Inc
Performance |
| Timeline |
| CECO Environmental Corp |
| BRP Inc |
CECO Environmental and BRP Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with CECO Environmental and BRP
The main advantage of trading using opposite CECO Environmental and BRP positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if CECO Environmental position performs unexpectedly, BRP 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 BRP will offset losses from the drop in BRP's long position.| CECO Environmental vs. Federal Signal | CECO Environmental vs. Zurn Elkay Water | CECO Environmental vs. Fuel Tech | CECO Environmental vs. Energy Recovery |
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 Fundamental Analysis module to view fundamental data based on most recent published financial statements.
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