Correlation Between Welcia Holdings and CECO Environmental
Can any of the company-specific risk be diversified away by investing in both Welcia Holdings and CECO Environmental 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 Welcia Holdings and CECO Environmental into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Welcia Holdings Co and CECO Environmental Corp, you can compare the effects of market volatilities on Welcia Holdings and CECO Environmental 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 Welcia Holdings with a short position of CECO Environmental. Check out your portfolio center. Please also check ongoing floating volatility patterns of Welcia Holdings and CECO Environmental.
Diversification Opportunities for Welcia Holdings and CECO Environmental
0.74 | Correlation Coefficient |
Poor diversification
The 3 months correlation between Welcia and CECO is 0.74. Overlapping area represents the amount of risk that can be diversified away by holding Welcia Holdings Co and CECO Environmental Corp in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on CECO Environmental Corp and Welcia Holdings 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 Welcia Holdings Co are associated (or correlated) with CECO Environmental. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of CECO Environmental Corp has no effect on the direction of Welcia Holdings i.e., Welcia Holdings and CECO Environmental go up and down completely randomly.
Pair Corralation between Welcia Holdings and CECO Environmental
Assuming the 90 days horizon Welcia Holdings Co is expected to generate 8.32 times more return on investment than CECO Environmental. However, Welcia Holdings is 8.32 times more volatile than CECO Environmental Corp. It trades about 0.06 of its potential returns per unit of risk. CECO Environmental Corp is currently generating about 0.08 per unit of risk. If you would invest 2,120 in Welcia Holdings Co on September 5, 2024 and sell it today you would earn a total of 30.00 from holding Welcia Holdings Co or generate 1.42% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Significant |
| Accuracy | 30.51% |
| Values | Daily Returns |
Welcia Holdings Co vs. CECO Environmental Corp
Performance |
| Timeline |
| Welcia Holdings |
Risk-Adjusted Performance
0 of 100
Weak | Strong |
Very Weak
| CECO Environmental Corp |
Welcia Holdings and CECO Environmental Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Welcia Holdings and CECO Environmental
The main advantage of trading using opposite Welcia Holdings and CECO Environmental positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Welcia Holdings position performs unexpectedly, CECO Environmental 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 CECO Environmental will offset losses from the drop in CECO Environmental's long position.| Welcia Holdings vs. Olympic Steel | Welcia Holdings vs. Topbuild Corp | Welcia Holdings vs. Summit Environmental | Welcia Holdings vs. Skyline |
| CECO Environmental vs. Federal Signal | CECO Environmental vs. Zurn Elkay Water | CECO Environmental vs. Fuel Tech | CECO Environmental vs. Energy Recovery |
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 Theme Ratings module to determine theme ratings based on digital equity recommendations. Macroaxis theme ratings are based on combination of fundamental analysis and risk-adjusted market performance.
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