Correlation Between CECO ENVIRONMENTAL and Britvic Plc
Can any of the company-specific risk be diversified away by investing in both CECO ENVIRONMENTAL and Britvic Plc 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 Britvic Plc into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between CECO ENVIRONMENTAL and Britvic plc, you can compare the effects of market volatilities on CECO ENVIRONMENTAL and Britvic Plc 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 Britvic Plc. Check out your portfolio center. Please also check ongoing floating volatility patterns of CECO ENVIRONMENTAL and Britvic Plc.
Diversification Opportunities for CECO ENVIRONMENTAL and Britvic Plc
0.38 | Correlation Coefficient |
Weak diversification
The 3 months correlation between CECO and Britvic is 0.38. Overlapping area represents the amount of risk that can be diversified away by holding CECO ENVIRONMENTAL and Britvic plc in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Britvic plc 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 Britvic Plc. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Britvic plc has no effect on the direction of CECO ENVIRONMENTAL i.e., CECO ENVIRONMENTAL and Britvic Plc go up and down completely randomly.
Pair Corralation between CECO ENVIRONMENTAL and Britvic Plc
Assuming the 90 days trading horizon CECO ENVIRONMENTAL is expected to generate 1.53 times more return on investment than Britvic Plc. However, CECO ENVIRONMENTAL is 1.53 times more volatile than Britvic plc. It trades about 0.09 of its potential returns per unit of risk. Britvic plc is currently generating about 0.11 per unit of risk. If you would invest 1,840 in CECO ENVIRONMENTAL on September 4, 2024 and sell it today you would earn a total of 1,252 from holding CECO ENVIRONMENTAL or generate 68.04% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Very Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
CECO ENVIRONMENTAL vs. Britvic plc
Performance |
| Timeline |
| CECO ENVIRONMENTAL |
| Britvic plc |
CECO ENVIRONMENTAL and Britvic Plc Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with CECO ENVIRONMENTAL and Britvic Plc
The main advantage of trading using opposite CECO ENVIRONMENTAL and Britvic Plc positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if CECO ENVIRONMENTAL position performs unexpectedly, Britvic Plc 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 Britvic Plc will offset losses from the drop in Britvic Plc's long position.| CECO ENVIRONMENTAL vs. TOTAL GABON | CECO ENVIRONMENTAL vs. Walgreens Boots Alliance | CECO ENVIRONMENTAL vs. Peak Resources Limited |
| Britvic Plc vs. Virtus Investment Partners | Britvic Plc vs. NURAN WIRELESS INC | Britvic Plc vs. Apollo Investment Corp | Britvic Plc vs. INTERSHOP Communications Aktiengesellschaft |
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 Price Transformation module to use Price Transformation models to analyze the depth of different equity instruments across global markets.
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