Correlation Between California Engels and CECO Environmental

Can any of the company-specific risk be diversified away by investing in both California Engels 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 California Engels and CECO Environmental into the same portfolio, which is an essential part of the fundamental portfolio management process.

By analyzing existing cross correlation between California Engels Mining and CECO Environmental Corp, you can compare the effects of market volatilities on California Engels 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 California Engels with a short position of CECO Environmental. Check out your portfolio center. Please also check ongoing floating volatility patterns of California Engels and CECO Environmental.

Diversification Opportunities for California Engels and CECO Environmental

0.0

Correlation Coefficient

California Engels  CECO Environmental

Pay attention - limited upside

The 3 months correlation between California and CECO is 0.0. Overlapping area represents the amount of risk that can be diversified away by holding California Engels 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 California Engels 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 California Engels 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 California Engels i.e., California Engels and CECO Environmental go up and down completely randomly.

Pair Corralation between California Engels and CECO Environmental

If you would invest  265.00  in California Engels Mining on October 11, 2024 and sell it today you would earn a total of  0.00  from holding California Engels Mining or generate 0.0% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Flat
Strength	Insignificant
Accuracy	95.45%
Values	Daily Returns

California Engels Mining  vs.  CECO Environmental Corp

California Engels Mining

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days California Engels Mining has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of very healthy technical and fundamental indicators, California Engels is not utilizing all of its potentials. The newest stock price disarray, may contribute to short-term losses for the investors.

CECO Environmental Corp

Risk-Adjusted Performance

7 of 100

OK

Compared to the overall equity markets, risk-adjusted returns on investments in CECO Environmental Corp are ranked lower than 7 (%) of all global equities and portfolios over the last 90 days. In spite of very uncertain fundamental indicators, CECO Environmental displayed solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with California Engels and CECO Environmental

The main advantage of trading using opposite California Engels and CECO Environmental positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if California Engels 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.

The idea behind California Engels Mining and CECO Environmental Corp pairs trading is to make the combined position market-neutral, meaning the overall market's direction will not affect its win or loss (or potential downside or upside). This can be achieved by designing a pairs trade with two highly correlated stocks or equities that operate in a similar space or sector, making it possible to obtain profits through simple and relatively low-risk investment.

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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 My Watchlist Analysis module to analyze my current watchlist and to refresh optimization strategy. Macroaxis watchlist is based on self-learning algorithm to remember stocks you like.