Correlation Between CECO Environmental and NBCUNIVERSAL

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

Diversification Opportunities for CECO Environmental and NBCUNIVERSAL

-0.51

Correlation Coefficient

CECO Environmental  NBCUNIVERSAL

Excellent diversification

The 3 months correlation between CECO and NBCUNIVERSAL is -0.51. Overlapping area represents the amount of risk that can be diversified away by holding CECO Environmental Corp and NBCUNIVERSAL MEDIA LLC in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on NBCUNIVERSAL MEDIA LLC 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 NBCUNIVERSAL. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of NBCUNIVERSAL MEDIA LLC has no effect on the direction of CECO Environmental i.e., CECO Environmental and NBCUNIVERSAL go up and down completely randomly.

Pair Corralation between CECO Environmental and NBCUNIVERSAL

Given the investment horizon of 90 days CECO Environmental Corp is expected to generate 2.0 times more return on investment than NBCUNIVERSAL. However, CECO Environmental is 2.0 times more volatile than NBCUNIVERSAL MEDIA LLC. It trades about 0.07 of its potential returns per unit of risk. NBCUNIVERSAL MEDIA LLC is currently generating about 0.07 per unit of risk. If you would invest  2,618  in CECO Environmental Corp on October 22, 2024 and sell it today you would earn a total of  342.00  from holding CECO Environmental Corp or generate 13.06% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Against
Strength	Very Weak
Accuracy	54.1%
Values	Daily Returns

CECO Environmental Corp  vs.  NBCUNIVERSAL MEDIA LLC

CECO Environmental Corp

Risk-Adjusted Performance

5 of 100

Insignificant

Compared to the overall equity markets, risk-adjusted returns on investments in CECO Environmental Corp are ranked lower than 5 (%) 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.

NBCUNIVERSAL MEDIA LLC

Risk-Adjusted Performance

5 of 100

Modest

Compared to the overall equity markets, risk-adjusted returns on investments in NBCUNIVERSAL MEDIA LLC are ranked lower than 5 (%) of all global equities and portfolios over the last 90 days. Despite somewhat weak basic indicators, NBCUNIVERSAL may actually be approaching a critical reversion point that can send shares even higher in February 2025.

Pair Trading with CECO Environmental and NBCUNIVERSAL

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

The idea behind CECO Environmental Corp and NBCUNIVERSAL MEDIA LLC 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 Portfolio Holdings module to check your current holdings and cash postion to detemine if your portfolio needs rebalancing.