Correlation Between CECO ENVIRONMENTAL and Live Nation
Can any of the company-specific risk be diversified away by investing in both CECO ENVIRONMENTAL and Live Nation 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 Live Nation into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between CECO ENVIRONMENTAL and Live Nation Entertainment, you can compare the effects of market volatilities on CECO ENVIRONMENTAL and Live Nation 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 Live Nation. Check out your portfolio center. Please also check ongoing floating volatility patterns of CECO ENVIRONMENTAL and Live Nation.
Diversification Opportunities for CECO ENVIRONMENTAL and Live Nation
0.01 | Correlation Coefficient |
Significant diversification
The 3 months correlation between CECO and Live is 0.01. Overlapping area represents the amount of risk that can be diversified away by holding CECO ENVIRONMENTAL and Live Nation Entertainment in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Live Nation Entertainment 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 Live Nation. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Live Nation Entertainment has no effect on the direction of CECO ENVIRONMENTAL i.e., CECO ENVIRONMENTAL and Live Nation go up and down completely randomly.
Pair Corralation between CECO ENVIRONMENTAL and Live Nation
Assuming the 90 days trading horizon CECO ENVIRONMENTAL is expected to generate 1.64 times more return on investment than Live Nation. However, CECO ENVIRONMENTAL is 1.64 times more volatile than Live Nation Entertainment. It trades about 0.09 of its potential returns per unit of risk. Live Nation Entertainment is currently generating about 0.1 per unit of risk. If you would invest 1,490 in CECO ENVIRONMENTAL on August 25, 2024 and sell it today you would earn a total of 1,448 from holding CECO ENVIRONMENTAL or generate 97.18% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Insignificant |
| Accuracy | 100.0% |
| Values | Daily Returns |
CECO ENVIRONMENTAL vs. Live Nation Entertainment
Performance |
| Timeline |
| CECO ENVIRONMENTAL |
| Live Nation Entertainment |
CECO ENVIRONMENTAL and Live Nation Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with CECO ENVIRONMENTAL and Live Nation
The main advantage of trading using opposite CECO ENVIRONMENTAL and Live Nation positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if CECO ENVIRONMENTAL position performs unexpectedly, Live Nation 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 Live Nation will offset losses from the drop in Live Nation's long position.| CECO ENVIRONMENTAL vs. SIDETRADE EO 1 | CECO ENVIRONMENTAL vs. Auto Trader Group | CECO ENVIRONMENTAL vs. AUTO TRADER ADR | CECO ENVIRONMENTAL vs. MEDICAL FACILITIES NEW |
| Live Nation vs. Superior Plus Corp | Live Nation vs. NMI Holdings | Live Nation vs. Origin Agritech | Live Nation vs. SIVERS SEMICONDUCTORS AB |
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 Insider Screener module to find insiders across different sectors to evaluate their impact on performance.
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