Correlation Between CECO ENVIRONMENTAL and Columbia Sportswear
Can any of the company-specific risk be diversified away by investing in both CECO ENVIRONMENTAL and Columbia Sportswear 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 Columbia Sportswear into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between CECO ENVIRONMENTAL and Columbia Sportswear, you can compare the effects of market volatilities on CECO ENVIRONMENTAL and Columbia Sportswear 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 Columbia Sportswear. Check out your portfolio center. Please also check ongoing floating volatility patterns of CECO ENVIRONMENTAL and Columbia Sportswear.
Diversification Opportunities for CECO ENVIRONMENTAL and Columbia Sportswear
0.62 | Correlation Coefficient |
Poor diversification
The 3 months correlation between CECO and Columbia is 0.62. Overlapping area represents the amount of risk that can be diversified away by holding CECO ENVIRONMENTAL and Columbia Sportswear in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Columbia Sportswear 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 Columbia Sportswear. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Columbia Sportswear has no effect on the direction of CECO ENVIRONMENTAL i.e., CECO ENVIRONMENTAL and Columbia Sportswear go up and down completely randomly.
Pair Corralation between CECO ENVIRONMENTAL and Columbia Sportswear
Assuming the 90 days trading horizon CECO ENVIRONMENTAL is expected to generate 1.73 times more return on investment than Columbia Sportswear. However, CECO ENVIRONMENTAL is 1.73 times more volatile than Columbia Sportswear. It trades about 0.09 of its potential returns per unit of risk. Columbia Sportswear is currently generating about 0.03 per unit of risk. If you would invest 1,220 in CECO ENVIRONMENTAL on September 2, 2024 and sell it today you would earn a total of 1,778 from holding CECO ENVIRONMENTAL or generate 145.74% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Significant |
| Accuracy | 100.0% |
| Values | Daily Returns |
CECO ENVIRONMENTAL vs. Columbia Sportswear
Performance |
| Timeline |
| CECO ENVIRONMENTAL |
| Columbia Sportswear |
CECO ENVIRONMENTAL and Columbia Sportswear Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with CECO ENVIRONMENTAL and Columbia Sportswear
The main advantage of trading using opposite CECO ENVIRONMENTAL and Columbia Sportswear positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if CECO ENVIRONMENTAL position performs unexpectedly, Columbia Sportswear 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 Columbia Sportswear will offset losses from the drop in Columbia Sportswear's long position.| CECO ENVIRONMENTAL vs. Automatic Data Processing | CECO ENVIRONMENTAL vs. TIANDE CHEMICAL | CECO ENVIRONMENTAL vs. Soken Chemical Engineering | CECO ENVIRONMENTAL vs. Nucletron Electronic Aktiengesellschaft |
| Columbia Sportswear vs. Ralph Lauren | Columbia Sportswear vs. Superior Plus Corp | Columbia Sportswear vs. NMI Holdings | Columbia Sportswear vs. Origin Agritech |
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 Volatility Analysis module to get historical volatility and risk analysis based on latest market data.
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