Correlation Between CAZ Public and SVI Public

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

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

Diversification Opportunities for CAZ Public and SVI Public

0.82

Correlation Coefficient

CAZ Public  SVI Public

Very poor diversification

The 3 months correlation between CAZ and SVI is 0.82. Overlapping area represents the amount of risk that can be diversified away by holding CAZ Public and SVI Public in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on SVI Public and CAZ Public 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 CAZ Public are associated (or correlated) with SVI Public. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of SVI Public has no effect on the direction of CAZ Public i.e., CAZ Public and SVI Public go up and down completely randomly.

Pair Corralation between CAZ Public and SVI Public

Assuming the 90 days trading horizon CAZ Public is expected to under-perform the SVI Public. But the stock apears to be less risky and, when comparing its historical volatility, CAZ Public is 1.57 times less risky than SVI Public. The stock trades about -0.22 of its potential returns per unit of risk. The SVI Public is currently generating about -0.02 of returns per unit of risk over similar time horizon. If you would invest  810.00  in SVI Public on September 5, 2024 and sell it today you would lose (60.00) from holding SVI Public or give up 7.41% of portfolio value over 90 days.

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

CAZ Public  vs.  SVI Public

CAZ Public

Risk-Adjusted Performance

0 of 100

Very Weak

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

SVI Public

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days SVI Public has generated negative risk-adjusted returns adding no value to investors with long positions. Despite quite persistent forward indicators, SVI Public is not utilizing all of its potentials. The latest stock price mess, may contribute to short-term losses for the institutional investors.

Pair Trading with CAZ Public and SVI Public

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

The idea behind CAZ Public and SVI Public 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 Pair Correlation module to compare performance and examine fundamental relationship between any two equity instruments.