Correlation Between Chart Industries and CECO Environmental

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

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

Diversification Opportunities for Chart Industries and CECO Environmental

0.7

Correlation Coefficient

Chart Industries  CECO Environmental

Poor diversification

The 3 months correlation between Chart and CECO is 0.7. Overlapping area represents the amount of risk that can be diversified away by holding Chart Industries 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 Chart Industries 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 Chart Industries 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 Chart Industries i.e., Chart Industries and CECO Environmental go up and down completely randomly.

Pair Corralation between Chart Industries and CECO Environmental

Assuming the 90 days trading horizon Chart Industries is expected to generate 1.16 times more return on investment than CECO Environmental. However, Chart Industries is 1.16 times more volatile than CECO Environmental Corp. It trades about -0.06 of its potential returns per unit of risk. CECO Environmental Corp is currently generating about -0.11 per unit of risk. If you would invest  6,799  in Chart Industries on December 20, 2024 and sell it today you would lose (933.00) from holding Chart Industries or give up 13.72% of portfolio value over 90 days.

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

Chart Industries  vs.  CECO Environmental Corp

Chart Industries

Risk-Adjusted Performance

Very Weak

Over the last 90 days Chart Industries has generated negative risk-adjusted returns adding no value to investors with long positions. Despite latest weak performance, the Preferred Stock's fundamental drivers remain strong and the current disturbance on Wall Street may also be a sign of long term gains for the company 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 Chart Industries and CECO Environmental

The main advantage of trading using opposite Chart Industries and CECO Environmental positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Chart Industries 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 Chart Industries 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.

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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 Analyst Advice module to analyst recommendations and target price estimates broken down by several categories.