Correlation Between CECO Environmental and NYSE Composite
Can any of the company-specific risk be diversified away by investing in both CECO Environmental and NYSE Composite 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 NYSE Composite 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 NYSE Composite, you can compare the effects of market volatilities on CECO Environmental and NYSE Composite 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 NYSE Composite. Check out your portfolio center. Please also check ongoing floating volatility patterns of CECO Environmental and NYSE Composite.
Diversification Opportunities for CECO Environmental and NYSE Composite
0.58 | Correlation Coefficient |
Very weak diversification
The 3 months correlation between CECO and NYSE is 0.58. Overlapping area represents the amount of risk that can be diversified away by holding CECO Environmental Corp and NYSE Composite in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on NYSE Composite 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 NYSE Composite. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of NYSE Composite has no effect on the direction of CECO Environmental i.e., CECO Environmental and NYSE Composite go up and down completely randomly.
Pair Corralation between CECO Environmental and NYSE Composite
Given the investment horizon of 90 days CECO Environmental Corp is expected to generate 5.65 times more return on investment than NYSE Composite. However, CECO Environmental is 5.65 times more volatile than NYSE Composite. It trades about 0.27 of its potential returns per unit of risk. NYSE Composite is currently generating about 0.01 per unit of risk. If you would invest 2,838 in CECO Environmental Corp on September 17, 2024 and sell it today you would earn a total of 373.00 from holding CECO Environmental Corp or generate 13.14% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
CECO Environmental Corp vs. NYSE Composite
Performance |
| Timeline |
CECO Environmental and NYSE Composite Volatility Contrast
Predicted Return Density |
| Returns |
CECO Environmental Corp
Pair trading matchups for CECO Environmental
NYSE Composite
Pair trading matchups for NYSE Composite
Pair Trading with CECO Environmental and NYSE Composite
The main advantage of trading using opposite CECO Environmental and NYSE Composite positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if CECO Environmental position performs unexpectedly, NYSE Composite 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 NYSE Composite will offset losses from the drop in NYSE Composite's long position.| CECO Environmental vs. Zurn Elkay Water | CECO Environmental vs. Energy Recovery | CECO Environmental vs. Federal Signal | CECO Environmental vs. CO2 Solutions |
| NYSE Composite vs. Stepan Company | NYSE Composite vs. CECO Environmental Corp | NYSE Composite vs. Jeld Wen Holding | NYSE Composite vs. Griffon |
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.
Other Complementary Tools
| Stock Screener Find equities using a custom stock filter or screen asymmetry in trading patterns, price, volume, or investment outlook. | |
| Price Exposure Probability Analyze equity upside and downside potential for a given time horizon across multiple markets | |
| Portfolio Holdings Check your current holdings and cash postion to detemine if your portfolio needs rebalancing | |
| Stock Tickers Use high-impact, comprehensive, and customizable stock tickers that can be easily integrated to any websites | |
| Portfolio Backtesting Avoid under-diversification and over-optimization by backtesting your portfolios |