Correlation Between Atlas Air and CECO Environmental

Can any of the company-specific risk be diversified away by investing in both Atlas Air and CECO Environmental 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 Atlas Air and CECO Environmental into the same portfolio, which is an essential part of the fundamental portfolio management process.

By analyzing existing cross correlation between Atlas Air Worldwide and CECO Environmental Corp, you can compare the effects of market volatilities on Atlas Air and CECO Environmental 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 Atlas Air with a short position of CECO Environmental. Check out your portfolio center. Please also check ongoing floating volatility patterns of Atlas Air and CECO Environmental.

Diversification Opportunities for Atlas Air and CECO Environmental

-0.48

Correlation Coefficient

Atlas Air  CECO Environmental

Very good diversification

The 3 months correlation between Atlas and CECO is -0.48. Overlapping area represents the amount of risk that can be diversified away by holding Atlas Air Worldwide and CECO Environmental Corp in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on CECO Environmental Corp and Atlas Air 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 Atlas Air Worldwide are associated (or correlated) with CECO Environmental. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of CECO Environmental Corp has no effect on the direction of Atlas Air i.e., Atlas Air and CECO Environmental go up and down completely randomly.

Pair Corralation between Atlas Air and CECO Environmental

If you would invest  2,574  in CECO Environmental Corp on September 14, 2024 and sell it today you would earn a total of  698.00  from holding CECO Environmental Corp or generate 27.12% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Against
Strength	Very Weak
Accuracy	4.76%
Values	Daily Returns

Atlas Air Worldwide  vs.  CECO Environmental Corp

Atlas Air Worldwide

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Atlas Air Worldwide has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of fairly stable basic indicators, Atlas Air is not utilizing all of its potentials. The recent stock price fuss, may contribute to near-short-term losses for the sophisticated investors.

CECO Environmental Corp

Risk-Adjusted Performance

6 of 100

OK

Compared to the overall equity markets, risk-adjusted returns on investments in CECO Environmental Corp are ranked lower than 6 (%) of all global equities and portfolios over the last 90 days. In spite of very uncertain fundamental indicators, CECO Environmental displayed solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with Atlas Air and CECO Environmental

The main advantage of trading using opposite Atlas Air and CECO Environmental positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Atlas Air position performs unexpectedly, CECO Environmental 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 CECO Environmental will offset losses from the drop in CECO Environmental's long position.

The idea behind Atlas Air Worldwide and CECO Environmental Corp pairs trading is to make the combined position market-neutral, meaning the overall market's direction will not affect its win or loss (or potential downside or upside). This can be achieved by designing a pairs trade with two highly correlated stocks or equities that operate in a similar space or sector, making it possible to obtain profits through simple and relatively low-risk investment.

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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 Odds Of Bankruptcy module to get analysis of equity chance of financial distress in the next 2 years.