Correlation Between Service and CECO Environmental
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By analyzing existing cross correlation between Service Properties Trust and CECO Environmental Corp, you can compare the effects of market volatilities on Service 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 Service with a short position of CECO Environmental. Check out your portfolio center. Please also check ongoing floating volatility patterns of Service and CECO Environmental.
Diversification Opportunities for Service and CECO Environmental
-0.49 | Correlation Coefficient |
Very good diversification
The 3 months correlation between Service and CECO is -0.49. Overlapping area represents the amount of risk that can be diversified away by holding Service Properties Trust 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 Service 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 Service Properties Trust 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 Service i.e., Service and CECO Environmental go up and down completely randomly.
Pair Corralation between Service and CECO Environmental
Assuming the 90 days trading horizon Service Properties Trust is expected to under-perform the CECO Environmental. But the bond apears to be less risky and, when comparing its historical volatility, Service Properties Trust is 2.72 times less risky than CECO Environmental. The bond trades about -0.14 of its potential returns per unit of risk. The CECO Environmental Corp is currently generating about 0.62 of returns per unit of risk over similar time horizon. If you would invest 2,561 in CECO Environmental Corp on September 12, 2024 and sell it today you would earn a total of 805.00 from holding CECO Environmental Corp or generate 31.43% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Very Weak |
| Accuracy | 95.24% |
| Values | Daily Returns |
Service Properties Trust vs. CECO Environmental Corp
Performance |
| Timeline |
| Service Properties Trust |
| CECO Environmental Corp |
Service and CECO Environmental Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Service and CECO Environmental
The main advantage of trading using opposite Service and CECO Environmental positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Service 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.The idea behind Service Properties Trust and CECO Environmental Corp pairs trading is to make the combined position market-neutral, meaning the overall market's direction will not affect its win or loss (or potential downside or upside). This can be achieved by designing a pairs trade with two highly correlated stocks or equities that operate in a similar space or sector, making it possible to obtain profits through simple and relatively low-risk investment.| 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 Stocks Directory module to find actively traded stocks across global markets.
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