Correlation Between CECO Environmental and MORGAN

Can any of the company-specific risk be diversified away by investing in both CECO Environmental and MORGAN 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 MORGAN 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 MORGAN STANLEY 43, you can compare the effects of market volatilities on CECO Environmental and MORGAN 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 MORGAN. Check out your portfolio center. Please also check ongoing floating volatility patterns of CECO Environmental and MORGAN.

Diversification Opportunities for CECO Environmental and MORGAN

-0.45

Correlation Coefficient

CECO Environmental  MORGAN

Very good diversification

The 3 months correlation between CECO and MORGAN is -0.45. Overlapping area represents the amount of risk that can be diversified away by holding CECO Environmental Corp and MORGAN STANLEY 43 in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on MORGAN STANLEY 43 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 MORGAN. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of MORGAN STANLEY 43 has no effect on the direction of CECO Environmental i.e., CECO Environmental and MORGAN go up and down completely randomly.

Pair Corralation between CECO Environmental and MORGAN

Given the investment horizon of 90 days CECO Environmental Corp is expected to under-perform the MORGAN. In addition to that, CECO Environmental is 1.15 times more volatile than MORGAN STANLEY 43. It trades about -0.13 of its total potential returns per unit of risk. MORGAN STANLEY 43 is currently generating about 0.05 per unit of volatility. If you would invest  8,275  in MORGAN STANLEY 43 on December 31, 2024 and sell it today you would earn a total of  559.00  from holding MORGAN STANLEY 43 or generate 6.76% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Against
Strength	Very Weak
Accuracy	96.83%
Values	Daily Returns

CECO Environmental Corp  vs.  MORGAN STANLEY 43

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 May 2025. The recent disarray may also be a sign of long period up-swing for the firm investors.

MORGAN STANLEY 43

Risk-Adjusted Performance

Very Weak

Compared to the overall equity markets, risk-adjusted returns on investments in MORGAN STANLEY 43 are ranked lower than 4 (%) of all global equities and portfolios over the last 90 days. Despite somewhat uncertain basic indicators, MORGAN may actually be approaching a critical reversion point that can send shares even higher in May 2025.

Pair Trading with CECO Environmental and MORGAN

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

The idea behind CECO Environmental Corp and MORGAN STANLEY 43 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 Equity Search module to search for actively traded equities including funds and ETFs from over 30 global markets.