Correlation Between CECO Environmental and Graham Holdings
Can any of the company-specific risk be diversified away by investing in both CECO Environmental and Graham Holdings 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 Graham Holdings into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between CECO Environmental Corp and Graham Holdings Co, you can compare the effects of market volatilities on CECO Environmental and Graham Holdings 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 Graham Holdings. Check out your portfolio center. Please also check ongoing floating volatility patterns of CECO Environmental and Graham Holdings.
Diversification Opportunities for CECO Environmental and Graham Holdings
-0.53 | Correlation Coefficient |
Excellent diversification
The 3 months correlation between CECO and Graham is -0.53. Overlapping area represents the amount of risk that can be diversified away by holding CECO Environmental Corp and Graham Holdings Co in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Graham Holdings 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 Corp are associated (or correlated) with Graham Holdings. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Graham Holdings has no effect on the direction of CECO Environmental i.e., CECO Environmental and Graham Holdings go up and down completely randomly.
Pair Corralation between CECO Environmental and Graham Holdings
Given the investment horizon of 90 days CECO Environmental Corp is expected to under-perform the Graham Holdings. In addition to that, CECO Environmental is 1.82 times more volatile than Graham Holdings Co. It trades about -0.12 of its total potential returns per unit of risk. Graham Holdings Co is currently generating about 0.11 per unit of volatility. If you would invest 85,853 in Graham Holdings Co on December 18, 2024 and sell it today you would earn a total of 8,032 from holding Graham Holdings Co or generate 9.36% return on investment over 90 days.
Time Period | 3 Months [change] |
Direction | Moves Against |
Strength | Very Weak |
Accuracy | 100.0% |
Values | Daily Returns |
CECO Environmental Corp vs. Graham Holdings Co
Performance |
Timeline |
CECO Environmental Corp |
Graham Holdings |
CECO Environmental and Graham Holdings Volatility Contrast
Predicted Return Density |
Returns |
Pair Trading with CECO Environmental and Graham Holdings
The main advantage of trading using opposite CECO Environmental and Graham Holdings positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if CECO Environmental position performs unexpectedly, Graham Holdings 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 Graham Holdings will offset losses from the drop in Graham Holdings' long position.CECO Environmental vs. Federal Signal | CECO Environmental vs. Zurn Elkay Water | CECO Environmental vs. Fuel Tech | CECO Environmental vs. Energy Recovery |
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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 Dashboard module to portfolio dashboard that provides centralized access to all your investments.
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