Correlation Between CECO Environmental and National Vision
Can any of the company-specific risk be diversified away by investing in both CECO Environmental and National Vision 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 National Vision 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 National Vision Holdings, you can compare the effects of market volatilities on CECO Environmental and National Vision 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 National Vision. Check out your portfolio center. Please also check ongoing floating volatility patterns of CECO Environmental and National Vision.
Diversification Opportunities for CECO Environmental and National Vision
0.34 | Correlation Coefficient |
Weak diversification
The 3 months correlation between CECO and National is 0.34. Overlapping area represents the amount of risk that can be diversified away by holding CECO Environmental Corp and National Vision Holdings in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on National Vision Holdings 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 National Vision. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of National Vision Holdings has no effect on the direction of CECO Environmental i.e., CECO Environmental and National Vision go up and down completely randomly.
Pair Corralation between CECO Environmental and National Vision
Given the investment horizon of 90 days CECO Environmental Corp is expected to generate 1.24 times more return on investment than National Vision. However, CECO Environmental is 1.24 times more volatile than National Vision Holdings. It trades about 0.45 of its potential returns per unit of risk. National Vision Holdings is currently generating about 0.36 per unit of risk. If you would invest 2,256 in CECO Environmental Corp on August 30, 2024 and sell it today you would earn a total of 932.00 from holding CECO Environmental Corp or generate 41.31% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Very Weak |
| Accuracy | 95.65% |
| Values | Daily Returns |
CECO Environmental Corp vs. National Vision Holdings
Performance |
| Timeline |
| CECO Environmental Corp |
| National Vision Holdings |
CECO Environmental and National Vision Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with CECO Environmental and National Vision
The main advantage of trading using opposite CECO Environmental and National Vision positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if CECO Environmental position performs unexpectedly, National Vision 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 National Vision will offset losses from the drop in National Vision's long position.| CECO Environmental vs. Federal Signal | CECO Environmental vs. Zurn Elkay Water | CECO Environmental vs. Fuel Tech | CECO Environmental vs. CO2 Solutions |
| National Vision vs. Sally Beauty Holdings | National Vision vs. MarineMax | National Vision vs. Sportsmans | National Vision vs. 1 800 FLOWERSCOM |
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 Analyst Advice module to analyst recommendations and target price estimates broken down by several categories.
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