Correlation Between CECO Environmental and Forward Air

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

Diversification Opportunities for CECO Environmental and Forward Air

0.62

Correlation Coefficient

CECO Environmental  Forward Air

Poor diversification

The 3 months correlation between CECO and Forward is 0.62. Overlapping area represents the amount of risk that can be diversified away by holding CECO Environmental Corp and Forward Air in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Forward Air 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 Forward Air. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Forward Air has no effect on the direction of CECO Environmental i.e., CECO Environmental and Forward Air go up and down completely randomly.

Pair Corralation between CECO Environmental and Forward Air

Given the investment horizon of 90 days CECO Environmental Corp is expected to generate 0.72 times more return on investment than Forward Air. However, CECO Environmental Corp is 1.4 times less risky than Forward Air. It trades about 0.32 of its potential returns per unit of risk. Forward Air is currently generating about 0.21 per unit of risk. If you would invest  2,536  in CECO Environmental Corp on May 4, 2025 and sell it today you would earn a total of  1,977  from holding CECO Environmental Corp or generate 77.96% return on investment over 90 days.

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

CECO Environmental Corp  vs.  Forward Air

CECO Environmental Corp

Risk-Adjusted Performance

Solid

Compared to the overall equity markets, risk-adjusted returns on investments in CECO Environmental Corp are ranked lower than 24 (%) of all global equities and portfolios over the last 90 days. In spite of very inconsistent fundamental indicators, CECO Environmental displayed solid returns over the last few months and may actually be approaching a breakup point.

Forward Air

Risk-Adjusted Performance

Solid

Compared to the overall equity markets, risk-adjusted returns on investments in Forward Air are ranked lower than 16 (%) of all global equities and portfolios over the last 90 days. In spite of rather weak basic indicators, Forward Air exhibited solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with CECO Environmental and Forward Air

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

The idea behind CECO Environmental Corp and Forward Air 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 Technical Analysis module to check basic technical indicators and analysis based on most latest market data.