Correlation Between CECO ENVIRONMENTAL and CVS Health
Can any of the company-specific risk be diversified away by investing in both CECO ENVIRONMENTAL and CVS Health 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 CVS Health into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between CECO ENVIRONMENTAL and CVS Health, you can compare the effects of market volatilities on CECO ENVIRONMENTAL and CVS Health 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 CVS Health. Check out your portfolio center. Please also check ongoing floating volatility patterns of CECO ENVIRONMENTAL and CVS Health.
Diversification Opportunities for CECO ENVIRONMENTAL and CVS Health
0.35 | Correlation Coefficient |
Weak diversification
The 3 months correlation between CECO and CVS is 0.35. Overlapping area represents the amount of risk that can be diversified away by holding CECO ENVIRONMENTAL and CVS Health in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on CVS Health 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 CVS Health. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of CVS Health has no effect on the direction of CECO ENVIRONMENTAL i.e., CECO ENVIRONMENTAL and CVS Health go up and down completely randomly.
Pair Corralation between CECO ENVIRONMENTAL and CVS Health
Assuming the 90 days trading horizon CECO ENVIRONMENTAL is expected to generate 1.49 times more return on investment than CVS Health. However, CECO ENVIRONMENTAL is 1.49 times more volatile than CVS Health. It trades about 0.08 of its potential returns per unit of risk. CVS Health is currently generating about -0.04 per unit of risk. If you would invest 1,120 in CECO ENVIRONMENTAL on September 2, 2024 and sell it today you would earn a total of 1,878 from holding CECO ENVIRONMENTAL or generate 167.68% 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. CVS Health
Performance |
| Timeline |
| CECO ENVIRONMENTAL |
| CVS Health |
CECO ENVIRONMENTAL and CVS Health Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with CECO ENVIRONMENTAL and CVS Health
The main advantage of trading using opposite CECO ENVIRONMENTAL and CVS Health positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if CECO ENVIRONMENTAL position performs unexpectedly, CVS Health 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 CVS Health will offset losses from the drop in CVS Health'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 |
| CVS Health vs. INTERSHOP Communications Aktiengesellschaft | CVS Health vs. Computershare Limited | CVS Health vs. Charter Communications | CVS Health vs. KRISPY KREME DL 01 |
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 Portfolio Suggestion module to get suggestions outside of your existing asset allocation including your own model portfolios.
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