Correlation Between CECO Environmental and Keurig Dr
Can any of the company-specific risk be diversified away by investing in both CECO Environmental and Keurig Dr 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 Keurig Dr 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 Keurig Dr Pepper, you can compare the effects of market volatilities on CECO Environmental and Keurig Dr 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 Keurig Dr. Check out your portfolio center. Please also check ongoing floating volatility patterns of CECO Environmental and Keurig Dr.
Diversification Opportunities for CECO Environmental and Keurig Dr
-0.21 | Correlation Coefficient |
Very good diversification
The 3 months correlation between CECO and Keurig is -0.21. Overlapping area represents the amount of risk that can be diversified away by holding CECO Environmental Corp and Keurig Dr Pepper in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Keurig Dr Pepper 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 Keurig Dr. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Keurig Dr Pepper has no effect on the direction of CECO Environmental i.e., CECO Environmental and Keurig Dr go up and down completely randomly.
Pair Corralation between CECO Environmental and Keurig Dr
Given the investment horizon of 90 days CECO Environmental Corp is expected to generate 2.57 times more return on investment than Keurig Dr. However, CECO Environmental is 2.57 times more volatile than Keurig Dr Pepper. It trades about 0.11 of its potential returns per unit of risk. Keurig Dr Pepper is currently generating about -0.17 per unit of risk. If you would invest 2,685 in CECO Environmental Corp on September 19, 2024 and sell it today you would earn a total of 430.00 from holding CECO Environmental Corp or generate 16.01% 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. Keurig Dr Pepper
Performance |
| Timeline |
| CECO Environmental Corp |
| Keurig Dr Pepper |
CECO Environmental and Keurig Dr Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with CECO Environmental and Keurig Dr
The main advantage of trading using opposite CECO Environmental and Keurig Dr positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if CECO Environmental position performs unexpectedly, Keurig Dr 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 Keurig Dr will offset losses from the drop in Keurig Dr's long position.| CECO Environmental vs. Zurn Elkay Water | CECO Environmental vs. Federal Signal | CECO Environmental vs. CO2 Solutions | CECO Environmental vs. Fuel Tech |
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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 Pair Correlation module to compare performance and examine fundamental relationship between any two equity instruments.
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