Correlation Between CAVA Group, and CECO Environmental

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

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

Diversification Opportunities for CAVA Group, and CECO Environmental

0.07

Correlation Coefficient

CAVA Group,  CECO Environmental

Significant diversification

The 3 months correlation between CAVA and CECO is 0.07. Overlapping area represents the amount of risk that can be diversified away by holding CAVA Group, 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 CAVA Group, 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 CAVA Group, 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 CAVA Group, i.e., CAVA Group, and CECO Environmental go up and down completely randomly.

Pair Corralation between CAVA Group, and CECO Environmental

Given the investment horizon of 90 days CAVA Group, is expected to generate 16.58 times more return on investment than CECO Environmental. However, CAVA Group, is 16.58 times more volatile than CECO Environmental Corp. It trades about 0.06 of its potential returns per unit of risk. CECO Environmental Corp is currently generating about 0.08 per unit of risk. If you would invest  0.00  in CAVA Group, on September 18, 2024 and sell it today you would earn a total of  12,679  from holding CAVA Group, or generate 9.223372036854776E16% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Together
Strength	Insignificant
Accuracy	76.77%
Values	Daily Returns

CAVA Group,  vs.  CECO Environmental Corp

CAVA Group,

Risk-Adjusted Performance

1 of 100

Weak

Compared to the overall equity markets, risk-adjusted returns on investments in CAVA Group, are ranked lower than 1 (%) of all global equities and portfolios over the last 90 days. Despite somewhat strong basic indicators, CAVA Group, is not utilizing all of its potentials. The recent stock price disturbance, may contribute to short-term losses for the investors.

CECO Environmental Corp

Risk-Adjusted Performance

6 of 100

Modest

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 CAVA Group, and CECO Environmental

The main advantage of trading using opposite CAVA Group, and CECO Environmental positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if CAVA Group, 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 CAVA Group, 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 Balance Of Power module to check stock momentum by analyzing Balance Of Power indicator and other technical ratios.