Correlation Between CECO ENVIRONMENTAL and Ares Management
Can any of the company-specific risk be diversified away by investing in both CECO ENVIRONMENTAL and Ares Management 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 CECO ENVIRONMENTAL and Ares Management into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between CECO ENVIRONMENTAL and Ares Management Corp, you can compare the effects of market volatilities on CECO ENVIRONMENTAL and Ares Management 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 CECO ENVIRONMENTAL with a short position of Ares Management. Check out your portfolio center. Please also check ongoing floating volatility patterns of CECO ENVIRONMENTAL and Ares Management.
Diversification Opportunities for CECO ENVIRONMENTAL and Ares Management
0.38 | Correlation Coefficient |
Weak diversification
The 3 months correlation between CECO and Ares is 0.38. Overlapping area represents the amount of risk that can be diversified away by holding CECO ENVIRONMENTAL and Ares Management Corp in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Ares Management Corp and CECO ENVIRONMENTAL 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 CECO ENVIRONMENTAL are associated (or correlated) with Ares Management. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Ares Management Corp has no effect on the direction of CECO ENVIRONMENTAL i.e., CECO ENVIRONMENTAL and Ares Management go up and down completely randomly.
Pair Corralation between CECO ENVIRONMENTAL and Ares Management
Assuming the 90 days trading horizon CECO ENVIRONMENTAL is expected to generate 1.15 times more return on investment than Ares Management. However, CECO ENVIRONMENTAL is 1.15 times more volatile than Ares Management Corp. It trades about 0.56 of its potential returns per unit of risk. Ares Management Corp is currently generating about 0.2 per unit of risk. If you would invest 2,084 in CECO ENVIRONMENTAL on September 4, 2024 and sell it today you would earn a total of 1,008 from holding CECO ENVIRONMENTAL or generate 48.37% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Very Weak |
| Accuracy | 95.45% |
| Values | Daily Returns |
CECO ENVIRONMENTAL vs. Ares Management Corp
Performance |
| Timeline |
| CECO ENVIRONMENTAL |
| Ares Management Corp |
CECO ENVIRONMENTAL and Ares Management Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with CECO ENVIRONMENTAL and Ares Management
The main advantage of trading using opposite CECO ENVIRONMENTAL and Ares Management positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if CECO ENVIRONMENTAL position performs unexpectedly, Ares Management 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 Ares Management will offset losses from the drop in Ares Management's long position.| CECO ENVIRONMENTAL vs. TOTAL GABON | CECO ENVIRONMENTAL vs. Walgreens Boots Alliance | CECO ENVIRONMENTAL vs. Peak Resources Limited |
| Ares Management vs. Blackstone Group | Ares Management vs. BlackRock | Ares Management vs. The Bank of | Ares Management vs. Ameriprise Financial |
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 Competition Analyzer module to analyze and compare many basic indicators for a group of related or unrelated entities.
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