Correlation Between CECO ENVIRONMENTAL and Apple

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

By analyzing existing cross correlation between CECO ENVIRONMENTAL and Apple Inc, you can compare the effects of market volatilities on CECO ENVIRONMENTAL and Apple 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 Apple. Check out your portfolio center. Please also check ongoing floating volatility patterns of CECO ENVIRONMENTAL and Apple.

Diversification Opportunities for CECO ENVIRONMENTAL and Apple

0.52

Correlation Coefficient

CECO ENVIRONMENTAL  Apple

Very weak diversification

The 3 months correlation between CECO and Apple is 0.52. Overlapping area represents the amount of risk that can be diversified away by holding CECO ENVIRONMENTAL and Apple Inc in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Apple Inc 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 are associated (or correlated) with Apple. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Apple Inc has no effect on the direction of CECO ENVIRONMENTAL i.e., CECO ENVIRONMENTAL and Apple go up and down completely randomly.

Pair Corralation between CECO ENVIRONMENTAL and Apple

Assuming the 90 days trading horizon CECO ENVIRONMENTAL is expected to generate 1.91 times more return on investment than Apple. However, CECO ENVIRONMENTAL is 1.91 times more volatile than Apple Inc. It trades about -0.08 of its potential returns per unit of risk. Apple Inc is currently generating about -0.15 per unit of risk. If you would invest  2,782  in CECO ENVIRONMENTAL on December 29, 2024 and sell it today you would lose (534.00) from holding CECO ENVIRONMENTAL or give up 19.19% of portfolio value over 90 days.

Time Period	3 Months [change]
Direction	Moves Together
Strength	Weak
Accuracy	98.44%
Values	Daily Returns

CECO ENVIRONMENTAL  vs.  Apple Inc

CECO ENVIRONMENTAL

Risk-Adjusted Performance

Very Weak

Over the last 90 days CECO ENVIRONMENTAL has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of fragile 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.

Apple Inc

Risk-Adjusted Performance

Very Weak

Over the last 90 days Apple Inc 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 CECO ENVIRONMENTAL and Apple

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

The idea behind CECO ENVIRONMENTAL and Apple Inc 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 Options Analysis module to analyze and evaluate options and option chains as a potential hedge for your portfolios.