Correlation Between CECO ENVIRONMENTAL and Providence Gold
Can any of the company-specific risk be diversified away by investing in both CECO ENVIRONMENTAL and Providence Gold 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 Providence Gold into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between CECO ENVIRONMENTAL and Providence Gold Mines, you can compare the effects of market volatilities on CECO ENVIRONMENTAL and Providence Gold 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 Providence Gold. Check out your portfolio center. Please also check ongoing floating volatility patterns of CECO ENVIRONMENTAL and Providence Gold.
Diversification Opportunities for CECO ENVIRONMENTAL and Providence Gold
0.16 | Correlation Coefficient |
Average diversification
The 3 months correlation between CECO and Providence is 0.16. Overlapping area represents the amount of risk that can be diversified away by holding CECO ENVIRONMENTAL and Providence Gold Mines in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Providence Gold Mines 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 Providence Gold. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Providence Gold Mines has no effect on the direction of CECO ENVIRONMENTAL i.e., CECO ENVIRONMENTAL and Providence Gold go up and down completely randomly.
Pair Corralation between CECO ENVIRONMENTAL and Providence Gold
Assuming the 90 days trading horizon CECO ENVIRONMENTAL is expected to generate 15.32 times less return on investment than Providence Gold. But when comparing it to its historical volatility, CECO ENVIRONMENTAL is 10.97 times less risky than Providence Gold. It trades about 0.08 of its potential returns per unit of risk. Providence Gold Mines is currently generating about 0.12 of returns per unit of risk over similar time horizon. If you would invest 1.15 in Providence Gold Mines on September 14, 2024 and sell it today you would lose (0.10) from holding Providence Gold Mines or give up 8.7% of portfolio value over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Insignificant |
| Accuracy | 99.8% |
| Values | Daily Returns |
CECO ENVIRONMENTAL vs. Providence Gold Mines
Performance |
| Timeline |
| CECO ENVIRONMENTAL |
| Providence Gold Mines |
CECO ENVIRONMENTAL and Providence Gold Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with CECO ENVIRONMENTAL and Providence Gold
The main advantage of trading using opposite CECO ENVIRONMENTAL and Providence Gold positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if CECO ENVIRONMENTAL position performs unexpectedly, Providence Gold 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 Providence Gold will offset losses from the drop in Providence Gold's long position.| CECO ENVIRONMENTAL vs. Apple Inc | CECO ENVIRONMENTAL vs. Apple Inc | CECO ENVIRONMENTAL vs. Apple Inc | CECO ENVIRONMENTAL vs. Apple Inc |
| Providence Gold vs. Perseus Mining Limited | Providence Gold vs. OURGAME INTHOLDL 00005 | Providence Gold vs. Scientific Games | Providence Gold vs. LION ONE METALS |
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 Odds Of Bankruptcy module to get analysis of equity chance of financial distress in the next 2 years.
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