Correlation Between CECO Environmental and FTAC Emerald
Can any of the company-specific risk be diversified away by investing in both CECO Environmental and FTAC Emerald 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 FTAC Emerald 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 FTAC Emerald Acquisition, you can compare the effects of market volatilities on CECO Environmental and FTAC Emerald 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 FTAC Emerald. Check out your portfolio center. Please also check ongoing floating volatility patterns of CECO Environmental and FTAC Emerald.
Diversification Opportunities for CECO Environmental and FTAC Emerald
0.68 | Correlation Coefficient |
Poor diversification
The 3 months correlation between CECO and FTAC is 0.68. Overlapping area represents the amount of risk that can be diversified away by holding CECO Environmental Corp and FTAC Emerald Acquisition in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on FTAC Emerald Acquisition 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 FTAC Emerald. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of FTAC Emerald Acquisition has no effect on the direction of CECO Environmental i.e., CECO Environmental and FTAC Emerald go up and down completely randomly.
Pair Corralation between CECO Environmental and FTAC Emerald
Given the investment horizon of 90 days CECO Environmental is expected to generate 6.05 times less return on investment than FTAC Emerald. But when comparing it to its historical volatility, CECO Environmental Corp is 8.77 times less risky than FTAC Emerald. It trades about 0.48 of its potential returns per unit of risk. FTAC Emerald Acquisition is currently generating about 0.33 of returns per unit of risk over similar time horizon. If you would invest 18.00 in FTAC Emerald Acquisition on September 1, 2024 and sell it today you would earn a total of 52.00 from holding FTAC Emerald Acquisition or generate 288.89% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Significant |
| Accuracy | 100.0% |
| Values | Daily Returns |
CECO Environmental Corp vs. FTAC Emerald Acquisition
Performance |
| Timeline |
| CECO Environmental Corp |
| FTAC Emerald Acquisition |
CECO Environmental and FTAC Emerald Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with CECO Environmental and FTAC Emerald
The main advantage of trading using opposite CECO Environmental and FTAC Emerald positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if CECO Environmental position performs unexpectedly, FTAC Emerald 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 FTAC Emerald will offset losses from the drop in FTAC Emerald's long position.| CECO Environmental vs. Federal Signal | CECO Environmental vs. Zurn Elkay Water | CECO Environmental vs. Fuel Tech | CECO Environmental vs. Energy Recovery |
| FTAC Emerald vs. ServiceNow | FTAC Emerald vs. CECO Environmental Corp | FTAC Emerald vs. Tianjin Capital Environmental | FTAC Emerald vs. Allegheny Technologies Incorporated |
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 Analysis module to research over 250,000 global equities including funds, stocks and ETFs to find investment opportunities.
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