Correlation Between CECO Environmental and Vistra Energy
Can any of the company-specific risk be diversified away by investing in both CECO Environmental and Vistra Energy 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 Vistra Energy 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 Vistra Energy Corp, you can compare the effects of market volatilities on CECO Environmental and Vistra Energy 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 Vistra Energy. Check out your portfolio center. Please also check ongoing floating volatility patterns of CECO Environmental and Vistra Energy.
Diversification Opportunities for CECO Environmental and Vistra Energy
0.23 | Correlation Coefficient |
Modest diversification
The 3 months correlation between CECO and Vistra is 0.23. Overlapping area represents the amount of risk that can be diversified away by holding CECO Environmental Corp and Vistra Energy Corp in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Vistra Energy Corp 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 Vistra Energy. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Vistra Energy Corp has no effect on the direction of CECO Environmental i.e., CECO Environmental and Vistra Energy go up and down completely randomly.
Pair Corralation between CECO Environmental and Vistra Energy
Given the investment horizon of 90 days CECO Environmental is expected to generate 1.91 times less return on investment than Vistra Energy. In addition to that, CECO Environmental is 1.06 times more volatile than Vistra Energy Corp. It trades about 0.09 of its total potential returns per unit of risk. Vistra Energy Corp is currently generating about 0.19 per unit of volatility. If you would invest 2,412 in Vistra Energy Corp on August 31, 2024 and sell it today you would earn a total of 13,572 from holding Vistra Energy Corp or generate 562.69% 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. Vistra Energy Corp
Performance |
| Timeline |
| CECO Environmental Corp |
| Vistra Energy Corp |
CECO Environmental and Vistra Energy Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with CECO Environmental and Vistra Energy
The main advantage of trading using opposite CECO Environmental and Vistra Energy positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if CECO Environmental position performs unexpectedly, Vistra Energy 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 Vistra Energy will offset losses from the drop in Vistra Energy's long position.| CECO Environmental vs. Federal Signal | CECO Environmental vs. Zurn Elkay Water | CECO Environmental vs. Fuel Tech | CECO Environmental vs. Energy Recovery |
| Vistra Energy vs. Pampa Energia SA | Vistra Energy vs. TransAlta Corp | Vistra Energy vs. Kenon Holdings | Vistra Energy vs. NRG Energy |
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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