Correlation Between CECO Environmental and Mesa Air
Can any of the company-specific risk be diversified away by investing in both CECO Environmental and Mesa Air 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 Mesa Air 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 Mesa Air Group, you can compare the effects of market volatilities on CECO Environmental and Mesa Air 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 Mesa Air. Check out your portfolio center. Please also check ongoing floating volatility patterns of CECO Environmental and Mesa Air.
Diversification Opportunities for CECO Environmental and Mesa Air
0.24 | Correlation Coefficient |
Modest diversification
The 3 months correlation between CECO and Mesa is 0.24. Overlapping area represents the amount of risk that can be diversified away by holding CECO Environmental Corp and Mesa Air Group in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Mesa Air Group 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 Mesa Air. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Mesa Air Group has no effect on the direction of CECO Environmental i.e., CECO Environmental and Mesa Air go up and down completely randomly.
Pair Corralation between CECO Environmental and Mesa Air
Given the investment horizon of 90 days CECO Environmental Corp is expected to generate 0.53 times more return on investment than Mesa Air. However, CECO Environmental Corp is 1.9 times less risky than Mesa Air. It trades about 0.08 of its potential returns per unit of risk. Mesa Air Group is currently generating about 0.0 per unit of risk. If you would invest 2,453 in CECO Environmental Corp on September 1, 2024 and sell it today you would earn a total of 752.00 from holding CECO Environmental Corp or generate 30.66% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Very Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
CECO Environmental Corp vs. Mesa Air Group
Performance |
| Timeline |
| CECO Environmental Corp |
| Mesa Air Group |
CECO Environmental and Mesa Air Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with CECO Environmental and Mesa Air
The main advantage of trading using opposite CECO Environmental and Mesa Air positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if CECO Environmental position performs unexpectedly, Mesa Air 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 Mesa Air will offset losses from the drop in Mesa Air's long position.| CECO Environmental vs. Federal Signal | CECO Environmental vs. Zurn Elkay Water | CECO Environmental vs. Fuel Tech | CECO Environmental vs. Energy Recovery |
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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 Piotroski F Score module to get Piotroski F Score based on the binary analysis strategy of nine different fundamentals.
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