Correlation Between CVB Financial and HELIOS TECHS

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

By analyzing existing cross correlation between CVB Financial Corp and HELIOS TECHS INC, you can compare the effects of market volatilities on CVB Financial and HELIOS TECHS 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 CVB Financial with a short position of HELIOS TECHS. Check out your portfolio center. Please also check ongoing floating volatility patterns of CVB Financial and HELIOS TECHS.

Diversification Opportunities for CVB Financial and HELIOS TECHS

0.87

Correlation Coefficient

CVB Financial  HELIOS TECHS

Very poor diversification

The 3 months correlation between CVB and HELIOS is 0.87. Overlapping area represents the amount of risk that can be diversified away by holding CVB Financial Corp and HELIOS TECHS INC in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on HELIOS TECHS INC and CVB Financial 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 CVB Financial Corp are associated (or correlated) with HELIOS TECHS. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of HELIOS TECHS INC has no effect on the direction of CVB Financial i.e., CVB Financial and HELIOS TECHS go up and down completely randomly.

Pair Corralation between CVB Financial and HELIOS TECHS

Assuming the 90 days horizon CVB Financial Corp is expected to generate 1.0 times more return on investment than HELIOS TECHS. However, CVB Financial Corp is 1.0 times less risky than HELIOS TECHS. It trades about 0.01 of its potential returns per unit of risk. HELIOS TECHS INC is currently generating about 0.0 per unit of risk. If you would invest  2,135  in CVB Financial Corp on October 4, 2024 and sell it today you would lose (75.00) from holding CVB Financial Corp or give up 3.51% of portfolio value over 90 days.

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

CVB Financial Corp  vs.  HELIOS TECHS INC

CVB Financial Corp

Risk-Adjusted Performance

11 of 100

Good

Compared to the overall equity markets, risk-adjusted returns on investments in CVB Financial Corp are ranked lower than 11 (%) of all global equities and portfolios over the last 90 days. Despite nearly unsteady basic indicators, CVB Financial reported solid returns over the last few months and may actually be approaching a breakup point.

HELIOS TECHS INC

Risk-Adjusted Performance

1 of 100

Weak

Compared to the overall equity markets, risk-adjusted returns on investments in HELIOS TECHS INC are ranked lower than 1 (%) of all global equities and portfolios over the last 90 days. Despite nearly stable basic indicators, HELIOS TECHS is not utilizing all of its potentials. The current stock price disturbance, may contribute to mid-run losses for the stockholders.

Pair Trading with CVB Financial and HELIOS TECHS

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

The idea behind CVB Financial Corp and HELIOS TECHS 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.

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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 Theme Ratings module to determine theme ratings based on digital equity recommendations. Macroaxis theme ratings are based on combination of fundamental analysis and risk-adjusted market performance.