Correlation Between CECO Environmental and Artisan Partners

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

Diversification Opportunities for CECO Environmental and Artisan Partners

0.56

Correlation Coefficient

CECO Environmental  Artisan Partners

Very weak diversification

The 3 months correlation between CECO and Artisan is 0.56. Overlapping area represents the amount of risk that can be diversified away by holding CECO Environmental Corp and Artisan Partners Asset in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Artisan Partners Asset 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 Artisan Partners. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Artisan Partners Asset has no effect on the direction of CECO Environmental i.e., CECO Environmental and Artisan Partners go up and down completely randomly.

Pair Corralation between CECO Environmental and Artisan Partners

Given the investment horizon of 90 days CECO Environmental Corp is expected to generate 2.55 times more return on investment than Artisan Partners. However, CECO Environmental is 2.55 times more volatile than Artisan Partners Asset. It trades about -0.02 of its potential returns per unit of risk. Artisan Partners Asset is currently generating about -0.06 per unit of risk. If you would invest  2,969  in CECO Environmental Corp on September 20, 2024 and sell it today you would lose (50.00) from holding CECO Environmental Corp or give up 1.68% of portfolio value over 90 days.

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

CECO Environmental Corp  vs.  Artisan Partners Asset

CECO Environmental Corp

Risk-Adjusted Performance

2 of 100

Weak

Compared to the overall equity markets, risk-adjusted returns on investments in CECO Environmental Corp are ranked lower than 2 (%) of all global equities and portfolios over the last 90 days. In spite of very uncertain fundamental indicators, CECO Environmental may actually be approaching a critical reversion point that can send shares even higher in January 2025.

Artisan Partners Asset

Risk-Adjusted Performance

6 of 100

Weak

Compared to the overall equity markets, risk-adjusted returns on investments in Artisan Partners Asset are ranked lower than 6 (%) of all global equities and portfolios over the last 90 days. In spite of very abnormal basic indicators, Artisan Partners may actually be approaching a critical reversion point that can send shares even higher in January 2025.

Pair Trading with CECO Environmental and Artisan Partners

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

The idea behind CECO Environmental Corp and Artisan Partners Asset 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 Risk-Return Analysis module to view associations between returns expected from investment and the risk you assume.