Correlation Between CECO Environmental and Advanced Emissions
Can any of the company-specific risk be diversified away by investing in both CECO Environmental and Advanced Emissions 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 Advanced Emissions 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 Advanced Emissions Solutions, you can compare the effects of market volatilities on CECO Environmental and Advanced Emissions 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 Advanced Emissions. Check out your portfolio center. Please also check ongoing floating volatility patterns of CECO Environmental and Advanced Emissions.
Diversification Opportunities for CECO Environmental and Advanced Emissions
0.13 | Correlation Coefficient |
Average diversification
The 3 months correlation between CECO and Advanced is 0.13. Overlapping area represents the amount of risk that can be diversified away by holding CECO Environmental Corp and Advanced Emissions Solutions in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Advanced Emissions 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 Advanced Emissions. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Advanced Emissions has no effect on the direction of CECO Environmental i.e., CECO Environmental and Advanced Emissions go up and down completely randomly.
Pair Corralation between CECO Environmental and Advanced Emissions
Given the investment horizon of 90 days CECO Environmental Corp is expected to generate 0.5 times more return on investment than Advanced Emissions. However, CECO Environmental Corp is 1.99 times less risky than Advanced Emissions. It trades about 0.08 of its potential returns per unit of risk. Advanced Emissions Solutions is currently generating about 0.03 per unit of risk. If you would invest 1,178 in CECO Environmental Corp on August 27, 2024 and sell it today you would earn a total of 1,958 from holding CECO Environmental Corp or generate 166.21% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Insignificant |
| Accuracy | 31.85% |
| Values | Daily Returns |
CECO Environmental Corp vs. Advanced Emissions Solutions
Performance |
| Timeline |
| CECO Environmental Corp |
| Advanced Emissions |
Risk-Adjusted Performance
0 of 100
Weak | Strong |
Very Weak
CECO Environmental and Advanced Emissions Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with CECO Environmental and Advanced Emissions
The main advantage of trading using opposite CECO Environmental and Advanced Emissions positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if CECO Environmental position performs unexpectedly, Advanced Emissions 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 Advanced Emissions will offset losses from the drop in Advanced Emissions' long position.| CECO Environmental vs. Federal Signal | CECO Environmental vs. Zurn Elkay Water | CECO Environmental vs. Fuel Tech | CECO Environmental vs. 374Water Common Stock |
| Advanced Emissions vs. Vow ASA | Advanced Emissions vs. Seychelle Environmtl | Advanced Emissions vs. Eestech | Advanced Emissions vs. Energy and Water |
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 Equity Search module to search for actively traded equities including funds and ETFs from over 30 global markets.
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