Correlation Between Lifevantage and CECO Environmental
Can any of the company-specific risk be diversified away by investing in both Lifevantage 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 Lifevantage and CECO Environmental into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Lifevantage and CECO Environmental Corp, you can compare the effects of market volatilities on Lifevantage 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 Lifevantage with a short position of CECO Environmental. Check out your portfolio center. Please also check ongoing floating volatility patterns of Lifevantage and CECO Environmental.
Diversification Opportunities for Lifevantage and CECO Environmental
-0.25 | Correlation Coefficient |
Very good diversification
The 3 months correlation between Lifevantage and CECO is -0.25. Overlapping area represents the amount of risk that can be diversified away by holding Lifevantage 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 Lifevantage 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 Lifevantage 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 Lifevantage i.e., Lifevantage and CECO Environmental go up and down completely randomly.
Pair Corralation between Lifevantage and CECO Environmental
Given the investment horizon of 90 days Lifevantage is expected to generate 6.47 times less return on investment than CECO Environmental. But when comparing it to its historical volatility, Lifevantage is 1.31 times less risky than CECO Environmental. It trades about 0.05 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 Against |
| Strength | Insignificant |
| Accuracy | 100.0% |
| Values | Daily Returns |
Lifevantage vs. CECO Environmental Corp
Performance |
| Timeline |
| Lifevantage |
| CECO Environmental Corp |
Lifevantage and CECO Environmental Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Lifevantage and CECO Environmental
The main advantage of trading using opposite Lifevantage and CECO Environmental positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Lifevantage 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.| Lifevantage vs. Seneca Foods Corp | Lifevantage vs. Central Garden Pet | Lifevantage vs. Central Garden Pet | Lifevantage vs. Lifeway Foods |
| 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 Idea Breakdown module to analyze constituents of all Macroaxis ideas. Macroaxis investment ideas are predefined, sector-focused investing themes.
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