Correlation Between CECO Environmental and Kodiak Gas
Can any of the company-specific risk be diversified away by investing in both CECO Environmental and Kodiak Gas 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 Kodiak Gas 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 Kodiak Gas Services,, you can compare the effects of market volatilities on CECO Environmental and Kodiak Gas 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 Kodiak Gas. Check out your portfolio center. Please also check ongoing floating volatility patterns of CECO Environmental and Kodiak Gas.
Diversification Opportunities for CECO Environmental and Kodiak Gas
0.06 | Correlation Coefficient |
Significant diversification
The 3 months correlation between CECO and Kodiak is 0.06. Overlapping area represents the amount of risk that can be diversified away by holding CECO Environmental Corp and Kodiak Gas Services, in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Kodiak Gas Services, 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 Kodiak Gas. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Kodiak Gas Services, has no effect on the direction of CECO Environmental i.e., CECO Environmental and Kodiak Gas go up and down completely randomly.
Pair Corralation between CECO Environmental and Kodiak Gas
Given the investment horizon of 90 days CECO Environmental Corp is expected to generate 2.09 times more return on investment than Kodiak Gas. However, CECO Environmental is 2.09 times more volatile than Kodiak Gas Services,. It trades about 0.24 of its potential returns per unit of risk. Kodiak Gas Services, is currently generating about 0.49 per unit of risk. If you would invest 2,631 in CECO Environmental Corp on August 28, 2024 and sell it today you would earn a total of 668.00 from holding CECO Environmental Corp or generate 25.39% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Insignificant |
| Accuracy | 100.0% |
| Values | Daily Returns |
CECO Environmental Corp vs. Kodiak Gas Services,
Performance |
| Timeline |
| CECO Environmental Corp |
| Kodiak Gas Services, |
CECO Environmental and Kodiak Gas Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with CECO Environmental and Kodiak Gas
The main advantage of trading using opposite CECO Environmental and Kodiak Gas positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if CECO Environmental position performs unexpectedly, Kodiak Gas 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 Kodiak Gas will offset losses from the drop in Kodiak Gas' long position.| CECO Environmental vs. Federal Signal | CECO Environmental vs. Zurn Elkay Water | CECO Environmental vs. Fuel Tech | CECO Environmental vs. CO2 Solutions |
| Kodiak Gas vs. ProPetro Holding Corp | Kodiak Gas vs. RPC Inc | Kodiak Gas vs. MRC Global | Kodiak Gas vs. Expro Group 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 ETF Categories module to list of ETF categories grouped based on various criteria, such as the investment strategy or type of investments.
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