Correlation Between CECO ENVIRONMENTAL and Air Products
Can any of the company-specific risk be diversified away by investing in both CECO ENVIRONMENTAL and Air Products 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 Air Products into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between CECO ENVIRONMENTAL and Air Products and, you can compare the effects of market volatilities on CECO ENVIRONMENTAL and Air Products 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 Air Products. Check out your portfolio center. Please also check ongoing floating volatility patterns of CECO ENVIRONMENTAL and Air Products.
Diversification Opportunities for CECO ENVIRONMENTAL and Air Products
0.38 | Correlation Coefficient |
Weak diversification
The 3 months correlation between CECO and Air is 0.38. Overlapping area represents the amount of risk that can be diversified away by holding CECO ENVIRONMENTAL and Air Products and in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Air Products 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 are associated (or correlated) with Air Products. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Air Products has no effect on the direction of CECO ENVIRONMENTAL i.e., CECO ENVIRONMENTAL and Air Products go up and down completely randomly.
Pair Corralation between CECO ENVIRONMENTAL and Air Products
Assuming the 90 days trading horizon CECO ENVIRONMENTAL is expected to generate 1.79 times more return on investment than Air Products. However, CECO ENVIRONMENTAL is 1.79 times more volatile than Air Products and. It trades about 0.08 of its potential returns per unit of risk. Air Products and is currently generating about 0.02 per unit of risk. If you would invest 1,130 in CECO ENVIRONMENTAL on August 31, 2024 and sell it today you would earn a total of 1,876 from holding CECO ENVIRONMENTAL or generate 166.02% 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 vs. Air Products and
Performance |
| Timeline |
| CECO ENVIRONMENTAL |
| Air Products |
CECO ENVIRONMENTAL and Air Products Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with CECO ENVIRONMENTAL and Air Products
The main advantage of trading using opposite CECO ENVIRONMENTAL and Air Products positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if CECO ENVIRONMENTAL position performs unexpectedly, Air Products 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 Air Products will offset losses from the drop in Air Products' long position.| CECO ENVIRONMENTAL vs. ADRIATIC METALS LS 013355 | CECO ENVIRONMENTAL vs. POWER METALS | CECO ENVIRONMENTAL vs. CEOTRONICS | CECO ENVIRONMENTAL vs. Platinum Investment Management |
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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