Correlation Between CECO ENVIRONMENTAL and Varta AG
Can any of the company-specific risk be diversified away by investing in both CECO ENVIRONMENTAL and Varta AG 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 Varta AG into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between CECO ENVIRONMENTAL and Varta AG, you can compare the effects of market volatilities on CECO ENVIRONMENTAL and Varta AG 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 Varta AG. Check out your portfolio center. Please also check ongoing floating volatility patterns of CECO ENVIRONMENTAL and Varta AG.
Diversification Opportunities for CECO ENVIRONMENTAL and Varta AG
0.52 | Correlation Coefficient |
Very weak diversification
The 3 months correlation between CECO and Varta is 0.52. Overlapping area represents the amount of risk that can be diversified away by holding CECO ENVIRONMENTAL and Varta AG in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Varta AG 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 Varta AG. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Varta AG has no effect on the direction of CECO ENVIRONMENTAL i.e., CECO ENVIRONMENTAL and Varta AG go up and down completely randomly.
Pair Corralation between CECO ENVIRONMENTAL and Varta AG
Assuming the 90 days trading horizon CECO ENVIRONMENTAL is expected to under-perform the Varta AG. But the stock apears to be less risky and, when comparing its historical volatility, CECO ENVIRONMENTAL is 8.96 times less risky than Varta AG. The stock trades about -0.46 of its potential returns per unit of risk. The Varta AG is currently generating about 0.11 of returns per unit of risk over similar time horizon. If you would invest 94.00 in Varta AG on November 28, 2024 and sell it today you would earn a total of 16.00 from holding Varta AG or generate 17.02% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Weak |
| Accuracy | 95.65% |
| Values | Daily Returns |
CECO ENVIRONMENTAL vs. Varta AG
Performance |
| Timeline |
| CECO ENVIRONMENTAL |
| Varta AG |
CECO ENVIRONMENTAL and Varta AG Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with CECO ENVIRONMENTAL and Varta AG
The main advantage of trading using opposite CECO ENVIRONMENTAL and Varta AG positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if CECO ENVIRONMENTAL position performs unexpectedly, Varta AG 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 Varta AG will offset losses from the drop in Varta AG's long position.| CECO ENVIRONMENTAL vs. Methode Electronics | CECO ENVIRONMENTAL vs. Casio Computer CoLtd | CECO ENVIRONMENTAL vs. Take Two Interactive Software | CECO ENVIRONMENTAL vs. FANDIFI TECHNOLOGY P |
| Varta AG vs. CHINA TELECOM H | Varta AG vs. Treasury Wine Estates | Varta AG vs. INTERSHOP Communications Aktiengesellschaft | Varta AG vs. Chunghwa Telecom Co |
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 File Import module to quickly import all of your third-party portfolios from your local drive in csv format.
Other Complementary Tools
| Sync Your Broker Sync your existing holdings, watchlists, positions or portfolios from thousands of online brokerage services, banks, investment account aggregators and robo-advisors. | |
| Fundamentals Comparison Compare fundamentals across multiple equities to find investing opportunities | |
| Idea Optimizer Use advanced portfolio builder with pre-computed micro ideas to build optimal portfolio | |
| Portfolio Manager State of the art Portfolio Manager to monitor and improve performance of your invested capital | |
| Bollinger Bands Use Bollinger Bands indicator to analyze target price for a given investing horizon |