Correlation Between CECO Environmental and Minerals Technologies
Can any of the company-specific risk be diversified away by investing in both CECO Environmental and Minerals Technologies 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 Minerals Technologies 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 Minerals Technologies, you can compare the effects of market volatilities on CECO Environmental and Minerals Technologies 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 Minerals Technologies. Check out your portfolio center. Please also check ongoing floating volatility patterns of CECO Environmental and Minerals Technologies.
Diversification Opportunities for CECO Environmental and Minerals Technologies
0.3 | Correlation Coefficient |
Weak diversification
The 3 months correlation between CECO and Minerals is 0.3. Overlapping area represents the amount of risk that can be diversified away by holding CECO Environmental Corp and Minerals Technologies in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Minerals Technologies 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 Minerals Technologies. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Minerals Technologies has no effect on the direction of CECO Environmental i.e., CECO Environmental and Minerals Technologies go up and down completely randomly.
Pair Corralation between CECO Environmental and Minerals Technologies
Given the investment horizon of 90 days CECO Environmental Corp is expected to generate 1.83 times more return on investment than Minerals Technologies. However, CECO Environmental is 1.83 times more volatile than Minerals Technologies. It trades about 0.09 of its potential returns per unit of risk. Minerals Technologies is currently generating about 0.07 per unit of risk. If you would invest 1,299 in CECO Environmental Corp on September 4, 2024 and sell it today you would earn a total of 1,904 from holding CECO Environmental Corp or generate 146.57% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Very Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
CECO Environmental Corp vs. Minerals Technologies
Performance |
| Timeline |
| CECO Environmental Corp |
| Minerals Technologies |
CECO Environmental and Minerals Technologies Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with CECO Environmental and Minerals Technologies
The main advantage of trading using opposite CECO Environmental and Minerals Technologies positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if CECO Environmental position performs unexpectedly, Minerals Technologies 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 Minerals Technologies will offset losses from the drop in Minerals Technologies' long position.| CECO Environmental vs. Federal Signal | CECO Environmental vs. CO2 Solutions | CECO Environmental vs. Aquagold International | CECO Environmental vs. Thrivent High Yield |
| Minerals Technologies vs. Innospec | Minerals Technologies vs. Oil Dri | Minerals Technologies vs. H B Fuller | Minerals Technologies vs. Quaker Chemical |
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 Equity Search module to search for actively traded equities including funds and ETFs from over 30 global markets.
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