Correlation Between CECO Environmental and Grounded People
Can any of the company-specific risk be diversified away by investing in both CECO Environmental and Grounded People 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 Grounded People 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 Grounded People Apparel, you can compare the effects of market volatilities on CECO Environmental and Grounded People 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 Grounded People. Check out your portfolio center. Please also check ongoing floating volatility patterns of CECO Environmental and Grounded People.
Diversification Opportunities for CECO Environmental and Grounded People
0.0 | Correlation Coefficient |
Pay attention - limited upside
The 3 months correlation between CECO and Grounded is 0.0. Overlapping area represents the amount of risk that can be diversified away by holding CECO Environmental Corp and Grounded People Apparel in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Grounded People Apparel 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 Grounded People. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Grounded People Apparel has no effect on the direction of CECO Environmental i.e., CECO Environmental and Grounded People go up and down completely randomly.
Pair Corralation between CECO Environmental and Grounded People
Given the investment horizon of 90 days CECO Environmental is expected to generate 2.2 times less return on investment than Grounded People. But when comparing it to its historical volatility, CECO Environmental Corp is 1.71 times less risky than Grounded People. It trades about 0.07 of its potential returns per unit of risk. Grounded People Apparel is currently generating about 0.09 of returns per unit of risk over similar time horizon. If you would invest 40.00 in Grounded People Apparel on November 9, 2024 and sell it today you would earn a total of 63.00 from holding Grounded People Apparel or generate 157.5% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Flat |
| Strength | Insignificant |
| Accuracy | 100.0% |
| Values | Daily Returns |
CECO Environmental Corp vs. Grounded People Apparel
Performance |
| Timeline |
| CECO Environmental Corp |
| Grounded People Apparel |
CECO Environmental and Grounded People Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with CECO Environmental and Grounded People
The main advantage of trading using opposite CECO Environmental and Grounded People positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if CECO Environmental position performs unexpectedly, Grounded People 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 Grounded People will offset losses from the drop in Grounded People's long position.| CECO Environmental vs. Federal Signal | CECO Environmental vs. Zurn Elkay Water | CECO Environmental vs. Fuel Tech | CECO Environmental vs. Energy Recovery |
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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 Portfolio Analyzer module to portfolio analysis module that provides access to portfolio diagnostics and optimization engine.
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