Correlation Between Global E and CECO Environmental
Can any of the company-specific risk be diversified away by investing in both Global E and CECO Environmental 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 Global E and CECO Environmental into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Global E Online and CECO Environmental Corp, you can compare the effects of market volatilities on Global E and CECO Environmental 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 Global E with a short position of CECO Environmental. Check out your portfolio center. Please also check ongoing floating volatility patterns of Global E and CECO Environmental.
Diversification Opportunities for Global E and CECO Environmental
0.8 | Correlation Coefficient |
Very poor diversification
The 3 months correlation between Global and CECO is 0.8. Overlapping area represents the amount of risk that can be diversified away by holding Global E Online and CECO Environmental Corp in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on CECO Environmental Corp and Global E 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 Global E Online are associated (or correlated) with CECO Environmental. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of CECO Environmental Corp has no effect on the direction of Global E i.e., Global E and CECO Environmental go up and down completely randomly.
Pair Corralation between Global E and CECO Environmental
Given the investment horizon of 90 days Global E Online is expected to generate 0.7 times more return on investment than CECO Environmental. However, Global E Online is 1.42 times less risky than CECO Environmental. It trades about 0.34 of its potential returns per unit of risk. CECO Environmental Corp is currently generating about 0.18 per unit of risk. If you would invest 3,848 in Global E Online on September 13, 2024 and sell it today you would earn a total of 1,686 from holding Global E Online or generate 43.81% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Strong |
| Accuracy | 97.67% |
| Values | Daily Returns |
Global E Online vs. CECO Environmental Corp
Performance |
| Timeline |
| Global E Online |
| CECO Environmental Corp |
Global E and CECO Environmental Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Global E and CECO Environmental
The main advantage of trading using opposite Global E and CECO Environmental positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Global E position performs unexpectedly, CECO Environmental 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 CECO Environmental will offset losses from the drop in CECO Environmental's long position.| Global E vs. MercadoLibre | Global E vs. PDD Holdings | Global E vs. JD Inc Adr | Global E vs. Alibaba Group Holding |
| 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 Options Analysis module to analyze and evaluate options and option chains as a potential hedge for your portfolios.
Other Complementary Tools
| Portfolio Center All portfolio management and optimization tools to improve performance of your portfolios | |
| Investing Opportunities Build portfolios using our predefined set of ideas and optimize them against your investing preferences | |
| Aroon Oscillator Analyze current equity momentum using Aroon Oscillator and other momentum ratios | |
| Portfolio Backtesting Avoid under-diversification and over-optimization by backtesting your portfolios | |
| Alpha Finder Use alpha and beta coefficients to find investment opportunities after accounting for the risk |