Correlation Between CECO Environmental and Hurco Companies
Can any of the company-specific risk be diversified away by investing in both CECO Environmental and Hurco Companies 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 Hurco Companies 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 Hurco Companies, you can compare the effects of market volatilities on CECO Environmental and Hurco Companies 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 Hurco Companies. Check out your portfolio center. Please also check ongoing floating volatility patterns of CECO Environmental and Hurco Companies.
Diversification Opportunities for CECO Environmental and Hurco Companies
-0.1 | Correlation Coefficient |
Good diversification
The 3 months correlation between CECO and Hurco is -0.1. Overlapping area represents the amount of risk that can be diversified away by holding CECO Environmental Corp and Hurco Companies in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Hurco Companies 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 Hurco Companies. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Hurco Companies has no effect on the direction of CECO Environmental i.e., CECO Environmental and Hurco Companies go up and down completely randomly.
Pair Corralation between CECO Environmental and Hurco Companies
Given the investment horizon of 90 days CECO Environmental Corp is expected to generate 1.14 times more return on investment than Hurco Companies. However, CECO Environmental is 1.14 times more volatile than Hurco Companies. It trades about 0.1 of its potential returns per unit of risk. Hurco Companies is currently generating about 0.01 per unit of risk. If you would invest 1,933 in CECO Environmental Corp on August 28, 2024 and sell it today you would earn a total of 1,366 from holding CECO Environmental Corp or generate 70.67% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Insignificant |
| Accuracy | 100.0% |
| Values | Daily Returns |
CECO Environmental Corp vs. Hurco Companies
Performance |
| Timeline |
| CECO Environmental Corp |
| Hurco Companies |
CECO Environmental and Hurco Companies Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with CECO Environmental and Hurco Companies
The main advantage of trading using opposite CECO Environmental and Hurco Companies positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if CECO Environmental position performs unexpectedly, Hurco Companies 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 Hurco Companies will offset losses from the drop in Hurco Companies' long position.| CECO Environmental vs. Federal Signal | CECO Environmental vs. Zurn Elkay Water | CECO Environmental vs. Fuel Tech | CECO Environmental vs. Energy Recovery |
| Hurco Companies vs. Aquagold International | Hurco Companies vs. Morningstar Unconstrained Allocation | Hurco Companies vs. High Yield Municipal Fund | Hurco Companies vs. Thrivent High Yield |
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 Bonds Directory module to find actively traded corporate debentures issued by US companies.
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