Correlation Between CECO Environmental and United States
Can any of the company-specific risk be diversified away by investing in both CECO Environmental and United States 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 United States 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 United States Steel, you can compare the effects of market volatilities on CECO Environmental and United States 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 United States. Check out your portfolio center. Please also check ongoing floating volatility patterns of CECO Environmental and United States.
Diversification Opportunities for CECO Environmental and United States
-0.04 | Correlation Coefficient |
Good diversification
The 3 months correlation between CECO and United is -0.04. Overlapping area represents the amount of risk that can be diversified away by holding CECO Environmental Corp and United States Steel in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on United States Steel 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 United States. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of United States Steel has no effect on the direction of CECO Environmental i.e., CECO Environmental and United States go up and down completely randomly.
Pair Corralation between CECO Environmental and United States
Given the investment horizon of 90 days CECO Environmental Corp is expected to generate 1.0 times more return on investment than United States. However, CECO Environmental Corp is 1.0 times less risky than United States. It trades about 0.08 of its potential returns per unit of risk. United States Steel is currently generating about 0.04 per unit of risk. If you would invest 1,184 in CECO Environmental Corp on August 26, 2024 and sell it today you would earn a total of 1,952 from holding CECO Environmental Corp or generate 164.86% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Insignificant |
| Accuracy | 100.0% |
| Values | Daily Returns |
CECO Environmental Corp vs. United States Steel
Performance |
| Timeline |
| CECO Environmental Corp |
| United States Steel |
CECO Environmental and United States Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with CECO Environmental and United States
The main advantage of trading using opposite CECO Environmental and United States positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if CECO Environmental position performs unexpectedly, United States 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 United States will offset losses from the drop in United States' long position.| CECO Environmental vs. Federal Signal | CECO Environmental vs. Zurn Elkay Water | CECO Environmental vs. Fuel Tech | CECO Environmental vs. 374Water Common Stock |
| United States vs. Nucor Corp | United States vs. Steel Dynamics | United States vs. ArcelorMittal SA ADR | United States vs. Gerdau SA ADR |
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 My Watchlist Analysis module to analyze my current watchlist and to refresh optimization strategy. Macroaxis watchlist is based on self-learning algorithm to remember stocks you like.
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