Correlation Between CECO Environmental and 456837AQ6

Can any of the company-specific risk be diversified away by investing in both CECO Environmental and 456837AQ6 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 456837AQ6 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 ING GROEP NV, you can compare the effects of market volatilities on CECO Environmental and 456837AQ6 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 456837AQ6. Check out your portfolio center. Please also check ongoing floating volatility patterns of CECO Environmental and 456837AQ6.

Diversification Opportunities for CECO Environmental and 456837AQ6

-0.18

Correlation Coefficient

CECO Environmental  456837AQ6

Good diversification

The 3 months correlation between CECO and 456837AQ6 is -0.18. Overlapping area represents the amount of risk that can be diversified away by holding CECO Environmental Corp and ING GROEP NV in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on ING GROEP NV 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 456837AQ6. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of ING GROEP NV has no effect on the direction of CECO Environmental i.e., CECO Environmental and 456837AQ6 go up and down completely randomly.

Pair Corralation between CECO Environmental and 456837AQ6

Given the investment horizon of 90 days CECO Environmental Corp is expected to under-perform the 456837AQ6. In addition to that, CECO Environmental is 5.76 times more volatile than ING GROEP NV. It trades about -0.29 of its total potential returns per unit of risk. ING GROEP NV is currently generating about -0.35 per unit of volatility. If you would invest  9,689  in ING GROEP NV on September 25, 2024 and sell it today you would lose (228.00) from holding ING GROEP NV or give up 2.35% of portfolio value over 90 days.

Time Period	3 Months [change]
Direction	Moves Against
Strength	Insignificant
Accuracy	85.0%
Values	Daily Returns

CECO Environmental Corp  vs.  ING GROEP NV

CECO Environmental Corp

Risk-Adjusted Performance

1 of 100

Weak

Compared to the overall equity markets, risk-adjusted returns on investments in CECO Environmental Corp are ranked lower than 1 (%) of all global equities and portfolios over the last 90 days. In spite of very healthy fundamental indicators, CECO Environmental is not utilizing all of its potentials. The newest stock price disarray, may contribute to short-term losses for the investors.

ING GROEP NV

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days ING GROEP NV has generated negative risk-adjusted returns adding no value to investors with long positions. Despite somewhat strong basic indicators, 456837AQ6 is not utilizing all of its potentials. The recent stock price disturbance, may contribute to short-term losses for the investors.

Pair Trading with CECO Environmental and 456837AQ6

The main advantage of trading using opposite CECO Environmental and 456837AQ6 positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if CECO Environmental position performs unexpectedly, 456837AQ6 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 456837AQ6 will offset losses from the drop in 456837AQ6's long position.

The idea behind CECO Environmental Corp and ING GROEP NV 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 ETFs module to find actively traded Exchange Traded Funds (ETF) from around the world.