Correlation Between Fluent and CECO Environmental

Can any of the company-specific risk be diversified away by investing in both Fluent and CECO Environmental 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 Fluent and CECO Environmental into the same portfolio, which is an essential part of the fundamental portfolio management process.

By analyzing existing cross correlation between Fluent Inc and CECO Environmental Corp, you can compare the effects of market volatilities on Fluent and CECO Environmental 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 Fluent with a short position of CECO Environmental. Check out your portfolio center. Please also check ongoing floating volatility patterns of Fluent and CECO Environmental.

Diversification Opportunities for Fluent and CECO Environmental

0.34

Correlation Coefficient

Fluent  CECO Environmental

Weak diversification

The 3 months correlation between Fluent and CECO is 0.34. Overlapping area represents the amount of risk that can be diversified away by holding Fluent Inc and CECO Environmental Corp in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on CECO Environmental Corp and Fluent 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 Fluent Inc are associated (or correlated) with CECO Environmental. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of CECO Environmental Corp has no effect on the direction of Fluent i.e., Fluent and CECO Environmental go up and down completely randomly.

Pair Corralation between Fluent and CECO Environmental

Given the investment horizon of 90 days Fluent Inc is expected to under-perform the CECO Environmental. In addition to that, Fluent is 1.41 times more volatile than CECO Environmental Corp. It trades about -0.11 of its total potential returns per unit of risk. CECO Environmental Corp is currently generating about -0.13 per unit of volatility. If you would invest  2,950  in CECO Environmental Corp on December 19, 2024 and sell it today you would lose (602.00) from holding CECO Environmental Corp or give up 20.41% of portfolio value over 90 days.

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

Fluent Inc  vs.  CECO Environmental Corp

Fluent Inc

Risk-Adjusted Performance

Very Weak

Over the last 90 days Fluent Inc 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 comparatively stable which may send shares a bit higher in April 2025. The newest uproar may also be a sign of mid-term up-swing for the firm private investors.

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.

Pair Trading with Fluent and CECO Environmental

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

The idea behind Fluent Inc and CECO Environmental Corp 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 Price Ceiling Movement module to calculate and plot Price Ceiling Movement for different equity instruments.