Correlation Between CECO Environmental and STATE
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By analyzing existing cross correlation between CECO Environmental Corp and STATE STR P, you can compare the effects of market volatilities on CECO Environmental and STATE 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 STATE. Check out your portfolio center. Please also check ongoing floating volatility patterns of CECO Environmental and STATE.
Diversification Opportunities for CECO Environmental and STATE
0.06 | Correlation Coefficient |
Significant diversification
The 3 months correlation between CECO and STATE is 0.06. Overlapping area represents the amount of risk that can be diversified away by holding CECO Environmental Corp and STATE STR P in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on STATE STR P 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 STATE. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of STATE STR P has no effect on the direction of CECO Environmental i.e., CECO Environmental and STATE go up and down completely randomly.
Pair Corralation between CECO Environmental and STATE
Given the investment horizon of 90 days CECO Environmental Corp is expected to generate 8.38 times more return on investment than STATE. However, CECO Environmental is 8.38 times more volatile than STATE STR P. It trades about 0.39 of its potential returns per unit of risk. STATE STR P is currently generating about -0.22 per unit of risk. If you would invest 2,459 in CECO Environmental Corp on August 31, 2024 and sell it today you would earn a total of 729.00 from holding CECO Environmental Corp or generate 29.65% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Insignificant |
| Accuracy | 95.45% |
| Values | Daily Returns |
CECO Environmental Corp vs. STATE STR P
Performance |
| Timeline |
| CECO Environmental Corp |
| STATE STR P |
CECO Environmental and STATE Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with CECO Environmental and STATE
The main advantage of trading using opposite CECO Environmental and STATE positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if CECO Environmental position performs unexpectedly, STATE 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 STATE will offset losses from the drop in STATE's long position.| CECO Environmental vs. Federal Signal | CECO Environmental vs. Zurn Elkay Water | CECO Environmental vs. Fuel Tech | CECO Environmental vs. Energy Recovery |
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 Performance Analysis module to check effects of mean-variance optimization against your current asset allocation.
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