Correlation Between CECO Environmental and Griffon
Can any of the company-specific risk be diversified away by investing in both CECO Environmental and Griffon 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 Griffon 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 Griffon, you can compare the effects of market volatilities on CECO Environmental and Griffon 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 Griffon. Check out your portfolio center. Please also check ongoing floating volatility patterns of CECO Environmental and Griffon.
Diversification Opportunities for CECO Environmental and Griffon
0.61 | Correlation Coefficient |
Poor diversification
The 3 months correlation between CECO and Griffon is 0.61. Overlapping area represents the amount of risk that can be diversified away by holding CECO Environmental Corp and Griffon in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Griffon 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 Griffon. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Griffon has no effect on the direction of CECO Environmental i.e., CECO Environmental and Griffon go up and down completely randomly.
Pair Corralation between CECO Environmental and Griffon
Given the investment horizon of 90 days CECO Environmental Corp is expected to generate 1.23 times more return on investment than Griffon. However, CECO Environmental is 1.23 times more volatile than Griffon. It trades about 0.08 of its potential returns per unit of risk. Griffon is currently generating about 0.09 per unit of risk. If you would invest 1,220 in CECO Environmental Corp on August 28, 2024 and sell it today you would earn a total of 2,079 from holding CECO Environmental Corp or generate 170.41% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Significant |
| Accuracy | 100.0% |
| Values | Daily Returns |
CECO Environmental Corp vs. Griffon
Performance |
| Timeline |
| CECO Environmental Corp |
| Griffon |
CECO Environmental and Griffon Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with CECO Environmental and Griffon
The main advantage of trading using opposite CECO Environmental and Griffon positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if CECO Environmental position performs unexpectedly, Griffon 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 Griffon will offset losses from the drop in Griffon's long position.| CECO Environmental vs. Federal Signal | CECO Environmental vs. Zurn Elkay Water | CECO Environmental vs. Fuel Tech | CECO Environmental vs. Energy Recovery |
| Griffon vs. Steel Partners Holdings | Griffon vs. Brookfield Business Partners | Griffon vs. Tejon Ranch Co | Griffon vs. Compass Diversified Holdings |
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 Funds Screener module to find actively-traded funds from around the world traded on over 30 global exchanges.
Other Complementary Tools
| Price Transformation Use Price Transformation models to analyze the depth of different equity instruments across global markets | |
| Portfolio Dashboard Portfolio dashboard that provides centralized access to all your investments | |
| Bond Analysis Evaluate and analyze corporate bonds as a potential investment for your portfolios. | |
| Portfolio Volatility Check portfolio volatility and analyze historical return density to properly model market risk | |
| Financial Widgets Easily integrated Macroaxis content with over 30 different plug-and-play financial widgets |