Correlation Between CECO Environmental and 26442UAC8

Can any of the company-specific risk be diversified away by investing in both CECO Environmental and 26442UAC8 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 26442UAC8 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 DUKE ENERGY PROGRESS, you can compare the effects of market volatilities on CECO Environmental and 26442UAC8 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 26442UAC8. Check out your portfolio center. Please also check ongoing floating volatility patterns of CECO Environmental and 26442UAC8.

Diversification Opportunities for CECO Environmental and 26442UAC8

0.41

Correlation Coefficient

CECO Environmental  26442UAC8

Very weak diversification

The 3 months correlation between CECO and 26442UAC8 is 0.41. Overlapping area represents the amount of risk that can be diversified away by holding CECO Environmental Corp and DUKE ENERGY PROGRESS in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on DUKE ENERGY PROGRESS 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 26442UAC8. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of DUKE ENERGY PROGRESS has no effect on the direction of CECO Environmental i.e., CECO Environmental and 26442UAC8 go up and down completely randomly.

Pair Corralation between CECO Environmental and 26442UAC8

Given the investment horizon of 90 days CECO Environmental Corp is expected to under-perform the 26442UAC8. In addition to that, CECO Environmental is 2.09 times more volatile than DUKE ENERGY PROGRESS. It trades about -0.1 of its total potential returns per unit of risk. DUKE ENERGY PROGRESS is currently generating about 0.07 per unit of volatility. If you would invest  7,419  in DUKE ENERGY PROGRESS on December 24, 2024 and sell it today you would earn a total of  188.00  from holding DUKE ENERGY PROGRESS or generate 2.53% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Together
Strength	Weak
Accuracy	55.0%
Values	Daily Returns

CECO Environmental Corp  vs.  DUKE ENERGY PROGRESS

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.

DUKE ENERGY PROGRESS

Risk-Adjusted Performance

Modest

Compared to the overall equity markets, risk-adjusted returns on investments in DUKE ENERGY PROGRESS are ranked lower than 5 (%) of all global equities and portfolios over the last 90 days. Despite somewhat strong basic indicators, 26442UAC8 is not utilizing all of its potentials. The recent stock price disturbance, may contribute to short-term losses for the investors.

Pair Trading with CECO Environmental and 26442UAC8

The main advantage of trading using opposite CECO Environmental and 26442UAC8 positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if CECO Environmental position performs unexpectedly, 26442UAC8 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 26442UAC8 will offset losses from the drop in 26442UAC8's long position.

The idea behind CECO Environmental Corp and DUKE ENERGY PROGRESS 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 Share Portfolio module to track or share privately all of your investments from the convenience of any device.