Correlation Between National Health and CECO ENVIRONMENTAL
Can any of the company-specific risk be diversified away by investing in both National Health 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 National Health and CECO ENVIRONMENTAL into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between National Health Investors and CECO ENVIRONMENTAL, you can compare the effects of market volatilities on National Health 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 National Health with a short position of CECO ENVIRONMENTAL. Check out your portfolio center. Please also check ongoing floating volatility patterns of National Health and CECO ENVIRONMENTAL.
Diversification Opportunities for National Health and CECO ENVIRONMENTAL
-0.16 | Correlation Coefficient |
Good diversification
The 3 months correlation between National and CECO is -0.16. Overlapping area represents the amount of risk that can be diversified away by holding National Health Investors and CECO ENVIRONMENTAL in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on CECO ENVIRONMENTAL and National Health 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 National Health Investors 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 has no effect on the direction of National Health i.e., National Health and CECO ENVIRONMENTAL go up and down completely randomly.
Pair Corralation between National Health and CECO ENVIRONMENTAL
Assuming the 90 days trading horizon National Health is expected to generate 2.64 times less return on investment than CECO ENVIRONMENTAL. But when comparing it to its historical volatility, National Health Investors is 1.84 times less risky than CECO ENVIRONMENTAL. It trades about 0.05 of its potential returns per unit of risk. CECO ENVIRONMENTAL is currently generating about 0.08 of returns per unit of risk over similar time horizon. If you would invest 1,250 in CECO ENVIRONMENTAL on October 18, 2024 and sell it today you would earn a total of 1,828 from holding CECO ENVIRONMENTAL or generate 146.24% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Insignificant |
| Accuracy | 100.0% |
| Values | Daily Returns |
National Health Investors vs. CECO ENVIRONMENTAL
Performance |
| Timeline |
| National Health Investors |
| CECO ENVIRONMENTAL |
National Health and CECO ENVIRONMENTAL Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with National Health and CECO ENVIRONMENTAL
The main advantage of trading using opposite National Health and CECO ENVIRONMENTAL positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if National Health 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.| National Health vs. Penn National Gaming | National Health vs. CONTAGIOUS GAMING INC | National Health vs. FRACTAL GAMING GROUP | National Health vs. OFFICE DEPOT |
| CECO ENVIRONMENTAL vs. MagnaChip Semiconductor Corp | CECO ENVIRONMENTAL vs. Tower Semiconductor | CECO ENVIRONMENTAL vs. Guangdong Investment Limited | CECO ENVIRONMENTAL vs. FIRST SAVINGS FINL |
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 Diagnostics module to use generated alerts and portfolio events aggregator to diagnose current holdings.
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