Correlation Between Universal Technical and CECO Environmental
Can any of the company-specific risk be diversified away by investing in both Universal Technical 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 Universal Technical and CECO Environmental into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Universal Technical Institute and CECO Environmental Corp, you can compare the effects of market volatilities on Universal Technical 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 Universal Technical with a short position of CECO Environmental. Check out your portfolio center. Please also check ongoing floating volatility patterns of Universal Technical and CECO Environmental.
Diversification Opportunities for Universal Technical and CECO Environmental
0.85 | Correlation Coefficient |
Very poor diversification
The 3 months correlation between Universal and CECO is 0.85. Overlapping area represents the amount of risk that can be diversified away by holding Universal Technical Institute 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 Universal Technical 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 Universal Technical Institute 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 Universal Technical i.e., Universal Technical and CECO Environmental go up and down completely randomly.
Pair Corralation between Universal Technical and CECO Environmental
Considering the 90-day investment horizon Universal Technical Institute is expected to generate 0.98 times more return on investment than CECO Environmental. However, Universal Technical Institute is 1.02 times less risky than CECO Environmental. It trades about 0.24 of its potential returns per unit of risk. CECO Environmental Corp is currently generating about 0.08 per unit of risk. If you would invest 1,664 in Universal Technical Institute on October 25, 2024 and sell it today you would earn a total of 1,018 from holding Universal Technical Institute or generate 61.18% return on investment over 90 days.
Time Period | 3 Months [change] |
Direction | Moves Together |
Strength | Strong |
Accuracy | 100.0% |
Values | Daily Returns |
Universal Technical Institute vs. CECO Environmental Corp
Performance |
Timeline |
Universal Technical |
CECO Environmental Corp |
Universal Technical and CECO Environmental Volatility Contrast
Predicted Return Density |
Returns |
Pair Trading with Universal Technical and CECO Environmental
The main advantage of trading using opposite Universal Technical and CECO Environmental positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Universal Technical 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.Universal Technical vs. Laureate Education | Universal Technical vs. Strategic Education | Universal Technical vs. Grand Canyon Education | Universal Technical vs. American Public Education |
CECO Environmental vs. Federal Signal | CECO Environmental vs. Zurn Elkay Water | CECO Environmental vs. Fuel Tech | CECO Environmental vs. Energy Recovery |
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 Global Markets Map module to get a quick overview of global market snapshot using zoomable world map. Drill down to check world indexes.
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