Correlation Between CECO Environmental and Dow Jones
Can any of the company-specific risk be diversified away by investing in both CECO Environmental and Dow Jones 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 Dow Jones 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 Dow Jones Hong, you can compare the effects of market volatilities on CECO Environmental and Dow Jones 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 Dow Jones. Check out your portfolio center. Please also check ongoing floating volatility patterns of CECO Environmental and Dow Jones.
Diversification Opportunities for CECO Environmental and Dow Jones
-0.18 | Correlation Coefficient |
Good diversification
The 3 months correlation between CECO and Dow is -0.18. Overlapping area represents the amount of risk that can be diversified away by holding CECO Environmental Corp and Dow Jones Hong in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Dow Jones Hong 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 Dow Jones. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Dow Jones Hong has no effect on the direction of CECO Environmental i.e., CECO Environmental and Dow Jones go up and down completely randomly.
Pair Corralation between CECO Environmental and Dow Jones
Given the investment horizon of 90 days CECO Environmental Corp is expected to generate 2.57 times more return on investment than Dow Jones. However, CECO Environmental is 2.57 times more volatile than Dow Jones Hong. It trades about 0.08 of its potential returns per unit of risk. Dow Jones Hong is currently generating about -0.03 per unit of risk. If you would invest 1,235 in CECO Environmental Corp on September 3, 2024 and sell it today you would earn a total of 1,970 from holding CECO Environmental Corp or generate 159.51% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Insignificant |
| Accuracy | 97.06% |
| Values | Daily Returns |
CECO Environmental Corp vs. Dow Jones Hong
Performance |
| Timeline |
CECO Environmental and Dow Jones Volatility Contrast
Predicted Return Density |
| Returns |
CECO Environmental Corp
Pair trading matchups for CECO Environmental
Dow Jones Hong
Pair trading matchups for Dow Jones
Pair Trading with CECO Environmental and Dow Jones
The main advantage of trading using opposite CECO Environmental and Dow Jones positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if CECO Environmental position performs unexpectedly, Dow Jones 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 Dow Jones will offset losses from the drop in Dow Jones' long position.| CECO Environmental vs. Federal Signal | CECO Environmental vs. Zurn Elkay Water | CECO Environmental vs. Fuel Tech | CECO Environmental vs. Energy Recovery |
| Dow Jones vs. Jacobs Solutions | Dow Jones vs. CECO Environmental Corp | Dow Jones vs. Zhihu Inc ADR | Dow Jones vs. Western Acquisition Ventures |
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 Stock Screener module to find equities using a custom stock filter or screen asymmetry in trading patterns, price, volume, or investment outlook..
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