Correlation Between CECO Environmental and Federal Signal
Can any of the company-specific risk be diversified away by investing in both CECO Environmental and Federal Signal 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 Federal Signal 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 Federal Signal, you can compare the effects of market volatilities on CECO Environmental and Federal Signal 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 Federal Signal. Check out your portfolio center. Please also check ongoing floating volatility patterns of CECO Environmental and Federal Signal.
Diversification Opportunities for CECO Environmental and Federal Signal
0.05 | Correlation Coefficient |
Significant diversification
The 3 months correlation between CECO and Federal is 0.05. Overlapping area represents the amount of risk that can be diversified away by holding CECO Environmental Corp and Federal Signal in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Federal Signal 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 Federal Signal. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Federal Signal has no effect on the direction of CECO Environmental i.e., CECO Environmental and Federal Signal go up and down completely randomly.
Pair Corralation between CECO Environmental and Federal Signal
If you would invest 8,213 in Federal Signal on December 30, 2023 and sell it today you would earn a total of 274.00 from holding Federal Signal or generate 3.34% return on investment over 90 days.
Time Period | 3 Months [change] |
Direction | Moves Together |
Strength | Insignificant |
Accuracy | 0.0% |
Values | Daily Returns |
CECO Environmental Corp vs. Federal Signal
Performance |
Timeline |
CECO Environmental Corp |
Risk-Adjusted Performance
0 of 100
Low | High |
Very Weak
Federal Signal |
CECO Environmental and Federal Signal Volatility Contrast
Predicted Return Density |
Returns |
Pair Trading with CECO Environmental and Federal Signal
The main advantage of trading using opposite CECO Environmental and Federal Signal positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if CECO Environmental position performs unexpectedly, Federal Signal 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 Federal Signal will offset losses from the drop in Federal Signal's long position.CECO Environmental vs. Sligro Food Group | CECO Environmental vs. Cooper Stnd | CECO Environmental vs. Kandi Technologies Group | CECO Environmental vs. Weibo Corp |
Federal Signal vs. Energy Recovery | Federal Signal vs. Arq Inc | Federal Signal vs. Fuel Tech | Federal Signal vs. Purecycle Technologies Holdings |
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 Top Crypto Exchanges module to search and analyze digital assets across top global cryptocurrency exchanges.
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