Correlation Between CECO Environmental and Hancock Holding

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

Diversification Opportunities for CECO Environmental and Hancock Holding

0.0

Correlation Coefficient

CECO Environmental  Hancock Holding

Pay attention - limited upside

The 3 months correlation between CECO and Hancock is 0.0. Overlapping area represents the amount of risk that can be diversified away by holding CECO Environmental Corp and Hancock Holding in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Hancock Holding 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 Hancock Holding. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Hancock Holding has no effect on the direction of CECO Environmental i.e., CECO Environmental and Hancock Holding go up and down completely randomly.

Pair Corralation between CECO Environmental and Hancock Holding

If you would invest (100.00) in Hancock Holding on February 23, 2024 and sell it today you would earn a total of  100.00  from holding Hancock Holding or generate -100.0% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Flat
Strength	Insignificant
Accuracy	0.0%
Values	Daily Returns

CECO Environmental Corp  vs.  Hancock Holding

CECO Environmental Corp

Risk-Adjusted Performance

5 of 100

OK

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.

Hancock Holding

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Hancock Holding has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of rather sound technical indicators, Hancock Holding is not utilizing all of its potentials. The latest stock price tumult, may contribute to shorter-term losses for the shareholders.

Pair Trading with CECO Environmental and Hancock Holding

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

The idea behind CECO Environmental Corp and Hancock Holding 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 Investing Opportunities module to build portfolios using our predefined set of ideas and optimize them against your investing preferences.