Correlation Between Heritage Distilling and CVW CleanTech

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

By analyzing existing cross correlation between Heritage Distilling Holding and CVW CleanTech, you can compare the effects of market volatilities on Heritage Distilling and CVW CleanTech 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 Heritage Distilling with a short position of CVW CleanTech. Check out your portfolio center. Please also check ongoing floating volatility patterns of Heritage Distilling and CVW CleanTech.

Diversification Opportunities for Heritage Distilling and CVW CleanTech

0.43

Correlation Coefficient

Heritage Distilling  CVW CleanTech

Very weak diversification

The 3 months correlation between Heritage and CVW is 0.43. Overlapping area represents the amount of risk that can be diversified away by holding Heritage Distilling Holding and CVW CleanTech in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on CVW CleanTech and Heritage Distilling 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 Heritage Distilling Holding are associated (or correlated) with CVW CleanTech. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of CVW CleanTech has no effect on the direction of Heritage Distilling i.e., Heritage Distilling and CVW CleanTech go up and down completely randomly.

Pair Corralation between Heritage Distilling and CVW CleanTech

Given the investment horizon of 90 days Heritage Distilling Holding is expected to under-perform the CVW CleanTech. In addition to that, Heritage Distilling is 1.16 times more volatile than CVW CleanTech. It trades about -0.27 of its total potential returns per unit of risk. CVW CleanTech is currently generating about 0.02 per unit of volatility. If you would invest  70.00  in CVW CleanTech on December 4, 2024 and sell it today you would lose (15.00) from holding CVW CleanTech or give up 21.43% of portfolio value over 90 days.

Time Period	3 Months [change]
Direction	Moves Together
Strength	Weak
Accuracy	13.79%
Values	Daily Returns

Heritage Distilling Holding  vs.  CVW CleanTech

Heritage Distilling

Risk-Adjusted Performance

Very Weak

Over the last 90 days Heritage Distilling Holding has generated negative risk-adjusted returns adding no value to investors with long positions. Despite fragile performance in the last few months, the Stock's basic indicators remain quite persistent which may send shares a bit higher in April 2025. The latest mess may also be a sign of long-standing up-swing for the company institutional investors.

CVW CleanTech

Risk-Adjusted Performance

Very Weak

Over the last 90 days CVW CleanTech has generated negative risk-adjusted returns adding no value to investors with long positions. Despite nearly stable technical and fundamental indicators, CVW CleanTech is not utilizing all of its potentials. The recent stock price disturbance, may contribute to mid-run losses for the stockholders.

Pair Trading with Heritage Distilling and CVW CleanTech

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

The idea behind Heritage Distilling Holding and CVW CleanTech 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 Commodity Channel module to use Commodity Channel Index to analyze current equity momentum.