Correlation Between CECO Environmental and BSANCI

Can any of the company-specific risk be diversified away by investing in both CECO Environmental and BSANCI 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 BSANCI 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 BSANCI 3177 26 OCT 31, you can compare the effects of market volatilities on CECO Environmental and BSANCI 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 BSANCI. Check out your portfolio center. Please also check ongoing floating volatility patterns of CECO Environmental and BSANCI.

Diversification Opportunities for CECO Environmental and BSANCI

0.58

Correlation Coefficient

CECO Environmental  BSANCI

Very weak diversification

The 3 months correlation between CECO and BSANCI is 0.58. Overlapping area represents the amount of risk that can be diversified away by holding CECO Environmental Corp and BSANCI 3177 26 OCT 31 in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on BSANCI 3177 26 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 BSANCI. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of BSANCI 3177 26 has no effect on the direction of CECO Environmental i.e., CECO Environmental and BSANCI go up and down completely randomly.

Pair Corralation between CECO Environmental and BSANCI

Given the investment horizon of 90 days CECO Environmental Corp is expected to generate 2.57 times more return on investment than BSANCI. However, CECO Environmental is 2.57 times more volatile than BSANCI 3177 26 OCT 31. It trades about -0.02 of its potential returns per unit of risk. BSANCI 3177 26 OCT 31 is currently generating about -0.83 per unit of risk. If you would invest  3,277  in CECO Environmental Corp on October 10, 2024 and sell it today you would lose (61.00) from holding CECO Environmental Corp or give up 1.86% of portfolio value over 90 days.

Time Period	3 Months [change]
Direction	Moves Together
Strength	Weak
Accuracy	20.0%
Values	Daily Returns

CECO Environmental Corp  vs.  BSANCI 3177 26 OCT 31

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.

BSANCI 3177 26

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days BSANCI 3177 26 OCT 31 has generated negative risk-adjusted returns adding no value to investors with long positions. Despite uncertain performance in the last few months, the Bond's basic indicators remain somewhat strong which may send shares a bit higher in February 2025. The current disturbance may also be a sign of long term up-swing for BSANCI 3177 26 OCT 31 investors.

Pair Trading with CECO Environmental and BSANCI

The main advantage of trading using opposite CECO Environmental and BSANCI positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if CECO Environmental position performs unexpectedly, BSANCI 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 BSANCI will offset losses from the drop in BSANCI's long position.

The idea behind CECO Environmental Corp and BSANCI 3177 26 OCT 31 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 Performance Analysis module to check effects of mean-variance optimization against your current asset allocation.