Correlation Between CECO ENVIRONMENTAL and SPORTING
Can any of the company-specific risk be diversified away by investing in both CECO ENVIRONMENTAL and SPORTING 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 SPORTING into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between CECO ENVIRONMENTAL and SPORTING, you can compare the effects of market volatilities on CECO ENVIRONMENTAL and SPORTING 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 SPORTING. Check out your portfolio center. Please also check ongoing floating volatility patterns of CECO ENVIRONMENTAL and SPORTING.
Diversification Opportunities for CECO ENVIRONMENTAL and SPORTING
0.06 | Correlation Coefficient |
Significant diversification
The 3 months correlation between CECO and SPORTING is 0.06. Overlapping area represents the amount of risk that can be diversified away by holding CECO ENVIRONMENTAL and SPORTING in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on SPORTING 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 SPORTING. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of SPORTING has no effect on the direction of CECO ENVIRONMENTAL i.e., CECO ENVIRONMENTAL and SPORTING go up and down completely randomly.
Pair Corralation between CECO ENVIRONMENTAL and SPORTING
Assuming the 90 days trading horizon CECO ENVIRONMENTAL is expected to generate 6.03 times more return on investment than SPORTING. However, CECO ENVIRONMENTAL is 6.03 times more volatile than SPORTING. It trades about 0.56 of its potential returns per unit of risk. SPORTING is currently generating about -0.27 per unit of risk. If you would invest 1,955 in CECO ENVIRONMENTAL on August 30, 2024 and sell it today you would earn a total of 1,059 from holding CECO ENVIRONMENTAL or generate 54.17% 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. SPORTING
Performance |
| Timeline |
| CECO ENVIRONMENTAL |
| SPORTING |
CECO ENVIRONMENTAL and SPORTING Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with CECO ENVIRONMENTAL and SPORTING
The main advantage of trading using opposite CECO ENVIRONMENTAL and SPORTING positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if CECO ENVIRONMENTAL position performs unexpectedly, SPORTING 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 SPORTING will offset losses from the drop in SPORTING'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 |
| SPORTING vs. Apple Inc | SPORTING vs. Apple Inc | SPORTING vs. Superior Plus Corp | SPORTING 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 Premium Stories module to follow Macroaxis premium stories from verified contributors across different equity types, categories and coverage scope.
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