Correlation Between CAVA Group, and Valens

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

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

Diversification Opportunities for CAVA Group, and Valens

-0.22

Correlation Coefficient

CAVA Group,  Valens

Very good diversification

The 3 months correlation between CAVA and Valens is -0.22. Overlapping area represents the amount of risk that can be diversified away by holding CAVA Group, and Valens in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Valens and CAVA Group, 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 CAVA Group, are associated (or correlated) with Valens. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Valens has no effect on the direction of CAVA Group, i.e., CAVA Group, and Valens go up and down completely randomly.

Pair Corralation between CAVA Group, and Valens

Given the investment horizon of 90 days CAVA Group, is expected to generate 0.7 times more return on investment than Valens. However, CAVA Group, is 1.43 times less risky than Valens. It trades about 0.08 of its potential returns per unit of risk. Valens is currently generating about -0.05 per unit of risk. If you would invest  9,157  in CAVA Group, on September 25, 2024 and sell it today you would earn a total of  2,697  from holding CAVA Group, or generate 29.45% return on investment over 90 days.

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

CAVA Group,  vs.  Valens

CAVA Group,

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days CAVA Group, has generated negative risk-adjusted returns adding no value to investors with long positions. Despite somewhat strong basic indicators, CAVA Group, is not utilizing all of its potentials. The recent stock price disturbance, may contribute to short-term losses for the investors.

Valens

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Valens has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of latest fragile performance, the Stock's essential indicators remain healthy and the recent disarray on Wall Street may also be a sign of long period gains for the firm investors.

Pair Trading with CAVA Group, and Valens

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

The idea behind CAVA Group, and Valens 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 Equity Search module to search for actively traded equities including funds and ETFs from over 30 global markets.