Correlation Between CECO Environmental and Nordic Semiconductor
Can any of the company-specific risk be diversified away by investing in both CECO Environmental and Nordic Semiconductor 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 Nordic Semiconductor 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 Nordic Semiconductor ASA, you can compare the effects of market volatilities on CECO Environmental and Nordic Semiconductor 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 Nordic Semiconductor. Check out your portfolio center. Please also check ongoing floating volatility patterns of CECO Environmental and Nordic Semiconductor.
Diversification Opportunities for CECO Environmental and Nordic Semiconductor
0.17 | Correlation Coefficient |
Average diversification
The 3 months correlation between CECO and Nordic is 0.17. Overlapping area represents the amount of risk that can be diversified away by holding CECO Environmental Corp and Nordic Semiconductor ASA in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Nordic Semiconductor ASA 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 Nordic Semiconductor. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Nordic Semiconductor ASA has no effect on the direction of CECO Environmental i.e., CECO Environmental and Nordic Semiconductor go up and down completely randomly.
Pair Corralation between CECO Environmental and Nordic Semiconductor
Given the investment horizon of 90 days CECO Environmental Corp is expected to generate 1.13 times more return on investment than Nordic Semiconductor. However, CECO Environmental is 1.13 times more volatile than Nordic Semiconductor ASA. It trades about 0.45 of its potential returns per unit of risk. Nordic Semiconductor ASA is currently generating about 0.13 per unit of risk. If you would invest 2,256 in CECO Environmental Corp on August 30, 2024 and sell it today you would earn a total of 932.00 from holding CECO Environmental Corp or generate 41.31% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Insignificant |
| Accuracy | 100.0% |
| Values | Daily Returns |
CECO Environmental Corp vs. Nordic Semiconductor ASA
Performance |
| Timeline |
| CECO Environmental Corp |
| Nordic Semiconductor ASA |
CECO Environmental and Nordic Semiconductor Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with CECO Environmental and Nordic Semiconductor
The main advantage of trading using opposite CECO Environmental and Nordic Semiconductor positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if CECO Environmental position performs unexpectedly, Nordic Semiconductor 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 Nordic Semiconductor will offset losses from the drop in Nordic Semiconductor's long position.| CECO Environmental vs. Federal Signal | CECO Environmental vs. Zurn Elkay Water | CECO Environmental vs. Fuel Tech | CECO Environmental vs. CO2 Solutions |
| Nordic Semiconductor vs. NVIDIA | Nordic Semiconductor vs. Intel | Nordic Semiconductor vs. Taiwan Semiconductor Manufacturing | Nordic Semiconductor vs. Marvell Technology Group |
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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