Correlation Between CECO Environmental and Lithia
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By analyzing existing cross correlation between CECO Environmental Corp and Lithia Motors 4625, you can compare the effects of market volatilities on CECO Environmental and Lithia 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 Lithia. Check out your portfolio center. Please also check ongoing floating volatility patterns of CECO Environmental and Lithia.
Diversification Opportunities for CECO Environmental and Lithia
-0.57 | Correlation Coefficient |
Excellent diversification
The 3 months correlation between CECO and Lithia is -0.57. Overlapping area represents the amount of risk that can be diversified away by holding CECO Environmental Corp and Lithia Motors 4625 in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Lithia Motors 4625 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 Lithia. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Lithia Motors 4625 has no effect on the direction of CECO Environmental i.e., CECO Environmental and Lithia go up and down completely randomly.
Pair Corralation between CECO Environmental and Lithia
Given the investment horizon of 90 days CECO Environmental is expected to generate 18.51 times less return on investment than Lithia. But when comparing it to its historical volatility, CECO Environmental Corp is 23.1 times less risky than Lithia. It trades about 0.08 of its potential returns per unit of risk. Lithia Motors 4625 is currently generating about 0.06 of returns per unit of risk over similar time horizon. If you would invest 9,253 in Lithia Motors 4625 on September 2, 2024 and sell it today you would lose (491.00) from holding Lithia Motors 4625 or give up 5.31% of portfolio value over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Very Weak |
| Accuracy | 79.03% |
| Values | Daily Returns |
CECO Environmental Corp vs. Lithia Motors 4625
Performance |
| Timeline |
| CECO Environmental Corp |
| Lithia Motors 4625 |
CECO Environmental and Lithia Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with CECO Environmental and Lithia
The main advantage of trading using opposite CECO Environmental and Lithia positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if CECO Environmental position performs unexpectedly, Lithia 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 Lithia will offset losses from the drop in Lithia's long position.| CECO Environmental vs. Federal Signal | CECO Environmental vs. Zurn Elkay Water | CECO Environmental vs. Fuel Tech | CECO Environmental vs. Energy Recovery |
| Lithia vs. Stepan Company | Lithia vs. CECO Environmental Corp | Lithia vs. Sanyo Special Steel | Lithia vs. Procter Gamble |
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 Diagnostics module to use generated alerts and portfolio events aggregator to diagnose current holdings.
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