Correlation Between CECO Environmental and Questor Technology
Can any of the company-specific risk be diversified away by investing in both CECO Environmental and Questor Technology 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 Questor Technology 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 Questor Technology, you can compare the effects of market volatilities on CECO Environmental and Questor Technology 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 Questor Technology. Check out your portfolio center. Please also check ongoing floating volatility patterns of CECO Environmental and Questor Technology.
Diversification Opportunities for CECO Environmental and Questor Technology
-0.36 | Correlation Coefficient |
Very good diversification
The 3 months correlation between CECO and Questor is -0.36. Overlapping area represents the amount of risk that can be diversified away by holding CECO Environmental Corp and Questor Technology in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Questor Technology 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 Questor Technology. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Questor Technology has no effect on the direction of CECO Environmental i.e., CECO Environmental and Questor Technology go up and down completely randomly.
Pair Corralation between CECO Environmental and Questor Technology
Given the investment horizon of 90 days CECO Environmental is expected to generate 30.95 times less return on investment than Questor Technology. But when comparing it to its historical volatility, CECO Environmental Corp is 34.03 times less risky than Questor Technology. It trades about 0.12 of its potential returns per unit of risk. Questor Technology is currently generating about 0.1 of returns per unit of risk over similar time horizon. If you would invest 66.00 in Questor Technology on September 12, 2024 and sell it today you would lose (38.00) from holding Questor Technology or give up 57.58% of portfolio value over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Insignificant |
| Accuracy | 99.7% |
| Values | Daily Returns |
CECO Environmental Corp vs. Questor Technology
Performance |
| Timeline |
| CECO Environmental Corp |
| Questor Technology |
CECO Environmental and Questor Technology Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with CECO Environmental and Questor Technology
The main advantage of trading using opposite CECO Environmental and Questor Technology positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if CECO Environmental position performs unexpectedly, Questor Technology 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 Questor Technology will offset losses from the drop in Questor Technology's long position.| CECO Environmental vs. Federal Signal | CECO Environmental vs. Zurn Elkay Water | CECO Environmental vs. Fuel Tech | CECO Environmental vs. Energy Recovery |
| Questor Technology vs. Federal Signal | Questor Technology vs. Energy Recovery | Questor Technology vs. CECO Environmental Corp | Questor Technology vs. 374Water Common Stock |
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 Portfolio Suggestion module to get suggestions outside of your existing asset allocation including your own model portfolios.
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