Correlation Between CECO Environmental and CIGNA

Can any of the company-specific risk be diversified away by investing in both CECO Environmental and CIGNA 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 CIGNA 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 CIGNA P 305, you can compare the effects of market volatilities on CECO Environmental and CIGNA 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 CIGNA. Check out your portfolio center. Please also check ongoing floating volatility patterns of CECO Environmental and CIGNA.

Diversification Opportunities for CECO Environmental and CIGNA

0.0

Correlation Coefficient

CECO Environmental  CIGNA

Pay attention - limited upside

The 3 months correlation between CECO and CIGNA is 0.0. Overlapping area represents the amount of risk that can be diversified away by holding CECO Environmental Corp and CIGNA P 305 in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on CIGNA P 305 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 CIGNA. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of CIGNA P 305 has no effect on the direction of CECO Environmental i.e., CECO Environmental and CIGNA go up and down completely randomly.

Pair Corralation between CECO Environmental and CIGNA

Given the investment horizon of 90 days CECO Environmental Corp is expected to under-perform the CIGNA. In addition to that, CECO Environmental is 3.66 times more volatile than CIGNA P 305. It trades about -0.23 of its total potential returns per unit of risk. CIGNA P 305 is currently generating about -0.05 per unit of volatility. If you would invest  9,644  in CIGNA P 305 on December 5, 2024 and sell it today you would lose (53.00) from holding CIGNA P 305 or give up 0.55% of portfolio value over 90 days.

Time Period	3 Months [change]
Direction	Flat
Strength	Insignificant
Accuracy	66.67%
Values	Daily Returns

CECO Environmental Corp  vs.  CIGNA P 305

CECO Environmental Corp

Risk-Adjusted Performance

Very Weak

Over the last 90 days CECO Environmental Corp has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of uncertain performance in the last few months, the Stock's fundamental indicators remain very healthy which may send shares a bit higher in April 2025. The recent disarray may also be a sign of long period up-swing for the firm investors.

CIGNA P 305

Risk-Adjusted Performance

Weak

Compared to the overall equity markets, risk-adjusted returns on investments in CIGNA P 305 are ranked lower than 1 (%) of all global equities and portfolios over the last 90 days. Despite somewhat strong basic indicators, CIGNA is not utilizing all of its potentials. The current stock price disturbance, may contribute to short-term losses for the investors.

Pair Trading with CECO Environmental and CIGNA

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

The idea behind CECO Environmental Corp and CIGNA P 305 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 Stock Tickers module to use high-impact, comprehensive, and customizable stock tickers that can be easily integrated to any websites.