Correlation Between Western Sierra and CECO Environmental
Can any of the company-specific risk be diversified away by investing in both Western Sierra 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 Western Sierra and CECO Environmental into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Western Sierra Mining and CECO Environmental Corp, you can compare the effects of market volatilities on Western Sierra 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 Western Sierra with a short position of CECO Environmental. Check out your portfolio center. Please also check ongoing floating volatility patterns of Western Sierra and CECO Environmental.
Diversification Opportunities for Western Sierra and CECO Environmental
0.24 | Correlation Coefficient |
Modest diversification
The 3 months correlation between Western and CECO is 0.24. Overlapping area represents the amount of risk that can be diversified away by holding Western Sierra Mining 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 Western Sierra 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 Western Sierra Mining 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 Western Sierra i.e., Western Sierra and CECO Environmental go up and down completely randomly.
Pair Corralation between Western Sierra and CECO Environmental
Given the investment horizon of 90 days Western Sierra Mining is expected to generate 33.19 times more return on investment than CECO Environmental. However, Western Sierra is 33.19 times more volatile than CECO Environmental Corp. It trades about 0.1 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 9.47 in Western Sierra Mining on August 30, 2024 and sell it today you would lose (8.79) from holding Western Sierra Mining or give up 92.82% of portfolio value over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Very Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
Western Sierra Mining vs. CECO Environmental Corp
Performance |
| Timeline |
| Western Sierra Mining |
| CECO Environmental Corp |
Western Sierra and CECO Environmental Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Western Sierra and CECO Environmental
The main advantage of trading using opposite Western Sierra and CECO Environmental positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Western Sierra 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.| Western Sierra vs. Green Cures Botanical | Western Sierra vs. Cann American Corp | Western Sierra vs. Rimrock Gold Corp | Western Sierra vs. Galexxy Holdings |
| 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 Portfolio Anywhere module to track or share privately all of your investments from the convenience of any device.
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