Correlation Between Inter Parfums and CECO Environmental
Can any of the company-specific risk be diversified away by investing in both Inter Parfums 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 Inter Parfums and CECO Environmental into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Inter Parfums and CECO Environmental Corp, you can compare the effects of market volatilities on Inter Parfums 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 Inter Parfums with a short position of CECO Environmental. Check out your portfolio center. Please also check ongoing floating volatility patterns of Inter Parfums and CECO Environmental.
Diversification Opportunities for Inter Parfums and CECO Environmental
0.17 | Correlation Coefficient |
Average diversification
The 3 months correlation between Inter and CECO is 0.17. Overlapping area represents the amount of risk that can be diversified away by holding Inter Parfums 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 Inter Parfums 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 Inter Parfums 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 Inter Parfums i.e., Inter Parfums and CECO Environmental go up and down completely randomly.
Pair Corralation between Inter Parfums and CECO Environmental
Given the investment horizon of 90 days Inter Parfums is expected to generate 2.28 times less return on investment than CECO Environmental. But when comparing it to its historical volatility, Inter Parfums is 2.52 times less risky than CECO Environmental. It trades about 0.27 of its potential returns per unit of risk. CECO Environmental Corp is currently generating about 0.24 of returns per unit of risk over similar time horizon. If you would invest 2,631 in CECO Environmental Corp on August 28, 2024 and sell it today you would earn a total of 668.00 from holding CECO Environmental Corp or generate 25.39% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Insignificant |
| Accuracy | 100.0% |
| Values | Daily Returns |
Inter Parfums vs. CECO Environmental Corp
Performance |
| Timeline |
| Inter Parfums |
| CECO Environmental Corp |
Inter Parfums and CECO Environmental Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Inter Parfums and CECO Environmental
The main advantage of trading using opposite Inter Parfums and CECO Environmental positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Inter Parfums 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.| Inter Parfums vs. J J Snack | Inter Parfums vs. John B Sanfilippo | Inter Parfums vs. Innospec | Inter Parfums vs. Independent Bank |
| CECO Environmental vs. Federal Signal | CECO Environmental vs. Zurn Elkay Water | CECO Environmental vs. Fuel Tech | CECO Environmental vs. CO2 Solutions |
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.
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