Correlation Between Boston Beer and CECO Environmental
Can any of the company-specific risk be diversified away by investing in both Boston Beer 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 Boston Beer and CECO Environmental into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Boston Beer and CECO Environmental Corp, you can compare the effects of market volatilities on Boston Beer 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 Boston Beer with a short position of CECO Environmental. Check out your portfolio center. Please also check ongoing floating volatility patterns of Boston Beer and CECO Environmental.
Diversification Opportunities for Boston Beer and CECO Environmental
-0.23 | Correlation Coefficient |
Very good diversification
The 3 months correlation between Boston and CECO is -0.23. Overlapping area represents the amount of risk that can be diversified away by holding Boston Beer 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 Boston Beer 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 Boston Beer 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 Boston Beer i.e., Boston Beer and CECO Environmental go up and down completely randomly.
Pair Corralation between Boston Beer and CECO Environmental
Considering the 90-day investment horizon Boston Beer is expected to under-perform the CECO Environmental. But the stock apears to be less risky and, when comparing its historical volatility, Boston Beer is 1.32 times less risky than CECO Environmental. The stock trades about -0.01 of its potential returns per unit of risk. The CECO Environmental Corp is currently generating about 0.08 of returns per unit of risk over similar time horizon. 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 |
Boston Beer vs. CECO Environmental Corp
Performance |
| Timeline |
| Boston Beer |
| CECO Environmental Corp |
Boston Beer and CECO Environmental Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Boston Beer and CECO Environmental
The main advantage of trading using opposite Boston Beer and CECO Environmental positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Boston Beer 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.| Boston Beer vs. Anheuser Busch Inbev | Boston Beer vs. Molson Coors Beverage | Boston Beer vs. Heineken NV | Boston Beer vs. Ambev SA ADR |
| CECO Environmental vs. Federal Signal | CECO Environmental vs. Zurn Elkay Water | CECO Environmental vs. Fuel Tech | CECO Environmental vs. 374Water Common Stock |
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 Commodity Directory module to find actively traded commodities issued by global exchanges.
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