Correlation Between CECO ENVIRONMENTAL and Eidesvik Offshore
Can any of the company-specific risk be diversified away by investing in both CECO ENVIRONMENTAL and Eidesvik Offshore 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 Eidesvik Offshore into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between CECO ENVIRONMENTAL and Eidesvik Offshore ASA, you can compare the effects of market volatilities on CECO ENVIRONMENTAL and Eidesvik Offshore 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 Eidesvik Offshore. Check out your portfolio center. Please also check ongoing floating volatility patterns of CECO ENVIRONMENTAL and Eidesvik Offshore.
Diversification Opportunities for CECO ENVIRONMENTAL and Eidesvik Offshore
0.1 | Correlation Coefficient |
Average diversification
The 3 months correlation between CECO and Eidesvik is 0.1. Overlapping area represents the amount of risk that can be diversified away by holding CECO ENVIRONMENTAL and Eidesvik Offshore ASA in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Eidesvik Offshore ASA 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 Eidesvik Offshore. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Eidesvik Offshore ASA has no effect on the direction of CECO ENVIRONMENTAL i.e., CECO ENVIRONMENTAL and Eidesvik Offshore go up and down completely randomly.
Pair Corralation between CECO ENVIRONMENTAL and Eidesvik Offshore
Assuming the 90 days trading horizon CECO ENVIRONMENTAL is expected to generate 0.98 times more return on investment than Eidesvik Offshore. However, CECO ENVIRONMENTAL is 1.02 times less risky than Eidesvik Offshore. It trades about 0.08 of its potential returns per unit of risk. Eidesvik Offshore ASA is currently generating about 0.05 per unit of risk. If you would invest 1,140 in CECO ENVIRONMENTAL on August 30, 2024 and sell it today you would earn a total of 1,874 from holding CECO ENVIRONMENTAL or generate 164.39% 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. Eidesvik Offshore ASA
Performance |
| Timeline |
| CECO ENVIRONMENTAL |
| Eidesvik Offshore ASA |
CECO ENVIRONMENTAL and Eidesvik Offshore Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with CECO ENVIRONMENTAL and Eidesvik Offshore
The main advantage of trading using opposite CECO ENVIRONMENTAL and Eidesvik Offshore positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if CECO ENVIRONMENTAL position performs unexpectedly, Eidesvik Offshore 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 Eidesvik Offshore will offset losses from the drop in Eidesvik Offshore's long position.| CECO ENVIRONMENTAL vs. Apple Inc | CECO ENVIRONMENTAL vs. Apple Inc | CECO ENVIRONMENTAL vs. Superior Plus Corp | CECO ENVIRONMENTAL vs. SIVERS SEMICONDUCTORS AB |
| Eidesvik Offshore vs. NOV Inc | Eidesvik Offshore vs. Superior Plus Corp | Eidesvik Offshore vs. NMI Holdings | Eidesvik Offshore 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 Transaction History module to view history of all your transactions and understand their impact on performance.
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