Correlation Between CECO Environmental and Alaska Air
Can any of the company-specific risk be diversified away by investing in both CECO Environmental and Alaska Air 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 Alaska Air 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 Alaska Air Group, you can compare the effects of market volatilities on CECO Environmental and Alaska Air 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 Alaska Air. Check out your portfolio center. Please also check ongoing floating volatility patterns of CECO Environmental and Alaska Air.
Diversification Opportunities for CECO Environmental and Alaska Air
-0.73 | Correlation Coefficient |
Pay attention - limited upside
The 3 months correlation between CECO and Alaska is -0.73. Overlapping area represents the amount of risk that can be diversified away by holding CECO Environmental Corp and Alaska Air Group in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Alaska Air Group 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 Alaska Air. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Alaska Air Group has no effect on the direction of CECO Environmental i.e., CECO Environmental and Alaska Air go up and down completely randomly.
Pair Corralation between CECO Environmental and Alaska Air
Given the investment horizon of 90 days CECO Environmental Corp is expected to under-perform the Alaska Air. In addition to that, CECO Environmental is 1.18 times more volatile than Alaska Air Group. It trades about -0.2 of its total potential returns per unit of risk. Alaska Air Group is currently generating about -0.01 per unit of volatility. If you would invest 7,325 in Alaska Air Group on December 2, 2024 and sell it today you would lose (97.00) from holding Alaska Air Group or give up 1.32% of portfolio value over 90 days.
Time Period | 3 Months [change] |
Direction | Moves Against |
Strength | Weak |
Accuracy | 100.0% |
Values | Daily Returns |
CECO Environmental Corp vs. Alaska Air Group
Performance |
Timeline |
CECO Environmental Corp |
Alaska Air Group |
CECO Environmental and Alaska Air Volatility Contrast
Predicted Return Density |
Returns |
Pair Trading with CECO Environmental and Alaska Air
The main advantage of trading using opposite CECO Environmental and Alaska Air positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if CECO Environmental position performs unexpectedly, Alaska Air 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 Alaska Air will offset losses from the drop in Alaska Air's long position.CECO Environmental vs. Federal Signal | CECO Environmental vs. Zurn Elkay Water | CECO Environmental vs. Fuel Tech | CECO Environmental vs. Energy Recovery |
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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 Economic Indicators module to top statistical indicators that provide insights into how an economy is performing.
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