Correlation Between Amazon and CECO Environmental

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Can any of the company-specific risk be diversified away by investing in both Amazon 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 Amazon and CECO Environmental into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Amazon Inc and CECO Environmental Corp, you can compare the effects of market volatilities on Amazon 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 Amazon with a short position of CECO Environmental. Check out your portfolio center. Please also check ongoing floating volatility patterns of Amazon and CECO Environmental.

Diversification Opportunities for Amazon and CECO Environmental

  Correlation Coefficient

Pay attention - limited upside

The 3 months correlation between Amazon and CECO Environmental is -0.76. Overlapping area represents the amount of risk that can be diversified away by holding Amazon 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 Amazon 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 Amazon 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 Amazon i.e., Amazon and CECO Environmental go up and down completely randomly.

Pair Corralation between Amazon and CECO Environmental

Given the investment horizon of 90 days Amazon Inc is expected to under-perform the CECO Environmental. But the stock apears to be less risky and, when comparing its historical volatility, Amazon Inc is 1.21 times less risky than CECO Environmental. The stock trades about -0.03 of its potential returns per unit of risk. The CECO Environmental Corp is currently generating about 0.05 of returns per unit of risk over similar time horizon. If you would invest  721.00  in CECO Environmental Corp on September 2, 2022 and sell it today you would earn a total of  473.00  from holding CECO Environmental Corp or generate 65.6% return on investment over 90 days.
Time Period3 Months [change]
DirectionMoves Against 
ValuesDaily Returns

Amazon Inc  vs.  CECO Environmental Corp

 Performance (%) 
Amazon Inc 
Amazon Performance
0 of 100
Over the last 90 days Amazon Inc has generated negative risk-adjusted returns adding no value to investors with long positions. Despite inconsistent performance in the last few months, the Stock's basic indicators remain quite persistent which may send shares a bit higher in January 2023. The latest mess may also be a sign of long-standing up-swing for the company institutional investors.

Amazon Price Channel

CECO Environmental Corp 
CECO Environmental Performance
13 of 100
Compared to the overall equity markets, risk-adjusted returns on investments in CECO Environmental Corp are ranked lower than 13 (%) of all global equities and portfolios over the last 90 days. In spite of rather weak fundamental indicators, CECO Environmental exhibited solid returns over the last few months and may actually be approaching a breakup point.

CECO Environmental Price Channel

Amazon and CECO Environmental Volatility Contrast

   Predicted Return Density   

Pair Trading with Amazon and CECO Environmental

The main advantage of trading using opposite Amazon and CECO Environmental positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Amazon 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.
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The idea behind Amazon 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.
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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 Options Analysis module to analyze and evaluate options and option chains as a potential hedge for your portfolios.

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