Correlation Between Vistra Energy and CECO Environmental
Can any of the company-specific risk be diversified away by investing in both Vistra Energy 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 Vistra Energy and CECO Environmental into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Vistra Energy Corp and CECO Environmental Corp, you can compare the effects of market volatilities on Vistra Energy 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 Vistra Energy with a short position of CECO Environmental. Check out your portfolio center. Please also check ongoing floating volatility patterns of Vistra Energy and CECO Environmental.
Diversification Opportunities for Vistra Energy and CECO Environmental
0.28 | Correlation Coefficient |
Modest diversification
The 3 months correlation between Vistra and CECO is 0.28. Overlapping area represents the amount of risk that can be diversified away by holding Vistra Energy Corp 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 Vistra Energy 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 Vistra Energy Corp 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 Vistra Energy i.e., Vistra Energy and CECO Environmental go up and down completely randomly.
Pair Corralation between Vistra Energy and CECO Environmental
Considering the 90-day investment horizon Vistra Energy is expected to generate 1.05 times less return on investment than CECO Environmental. In addition to that, Vistra Energy is 1.3 times more volatile than CECO Environmental Corp. It trades about 0.37 of its total potential returns per unit of risk. CECO Environmental Corp is currently generating about 0.51 per unit of volatility. If you would invest 2,347 in CECO Environmental Corp on September 2, 2024 and sell it today you would earn a total of 858.00 from holding CECO Environmental Corp or generate 36.56% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Very Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
Vistra Energy Corp vs. CECO Environmental Corp
Performance |
| Timeline |
| Vistra Energy Corp |
| CECO Environmental Corp |
Vistra Energy and CECO Environmental Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Vistra Energy and CECO Environmental
The main advantage of trading using opposite Vistra Energy and CECO Environmental positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Vistra Energy 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.| Vistra Energy vs. Pampa Energia SA | Vistra Energy vs. TransAlta Corp | Vistra Energy vs. Power Assets Holdings |
| 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 Watchlist Optimization module to optimize watchlists to build efficient portfolios or rebalance existing positions based on the mean-variance optimization algorithm.
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