Correlation Between CECO Environmental and Lineage, Common

Can any of the company-specific risk be diversified away by investing in both CECO Environmental and Lineage, Common 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 Lineage, Common 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 Lineage, Common Stock, you can compare the effects of market volatilities on CECO Environmental and Lineage, Common 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 Lineage, Common. Check out your portfolio center. Please also check ongoing floating volatility patterns of CECO Environmental and Lineage, Common.

Diversification Opportunities for CECO Environmental and Lineage, Common

-0.47

Correlation Coefficient

CECO Environmental  Lineage, Common

Very good diversification

The 3 months correlation between CECO and Lineage, is -0.47. Overlapping area represents the amount of risk that can be diversified away by holding CECO Environmental Corp and Lineage, Common Stock in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Lineage, Common Stock 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 Lineage, Common. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Lineage, Common Stock has no effect on the direction of CECO Environmental i.e., CECO Environmental and Lineage, Common go up and down completely randomly.

Pair Corralation between CECO Environmental and Lineage, Common

Given the investment horizon of 90 days CECO Environmental Corp is expected to generate 2.22 times more return on investment than Lineage, Common. However, CECO Environmental is 2.22 times more volatile than Lineage, Common Stock. It trades about 0.13 of its potential returns per unit of risk. Lineage, Common Stock is currently generating about -0.28 per unit of risk. If you would invest  2,747  in CECO Environmental Corp on September 12, 2024 and sell it today you would earn a total of  728.50  from holding CECO Environmental Corp or generate 26.52% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Against
Strength	Very Weak
Accuracy	100.0%
Values	Daily Returns

CECO Environmental Corp  vs.  Lineage, Common Stock

CECO Environmental Corp

Risk-Adjusted Performance

10 of 100

OK

Compared to the overall equity markets, risk-adjusted returns on investments in CECO Environmental Corp are ranked lower than 10 (%) 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.

Lineage, Common Stock

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Lineage, Common Stock has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of weak performance in the last few months, the Stock's basic indicators remain rather sound which may send shares a bit higher in January 2025. The latest tumult may also be a sign of longer-term up-swing for the firm shareholders.

Pair Trading with CECO Environmental and Lineage, Common

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

The idea behind CECO Environmental Corp and Lineage, Common Stock 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.

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 Pair Correlation module to compare performance and examine fundamental relationship between any two equity instruments.