Correlation Between Clarke and Clairvest

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

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

Diversification Opportunities for Clarke and Clairvest

0.05

Correlation Coefficient

Clarke  Clairvest

Significant diversification

The 3 months correlation between Clarke and Clairvest is 0.05. Overlapping area represents the amount of risk that can be diversified away by holding Clarke Inc and Clairvest Group in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Clairvest Group and Clarke 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 Clarke Inc are associated (or correlated) with Clairvest. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Clairvest Group has no effect on the direction of Clarke i.e., Clarke and Clairvest go up and down completely randomly.

Pair Corralation between Clarke and Clairvest

Assuming the 90 days trading horizon Clarke Inc is expected to under-perform the Clairvest. But the stock apears to be less risky and, when comparing its historical volatility, Clarke Inc is 3.35 times less risky than Clairvest. The stock trades about -0.03 of its potential returns per unit of risk. The Clairvest Group is currently generating about 0.08 of returns per unit of risk over similar time horizon. If you would invest  7,170  in Clairvest Group on September 4, 2024 and sell it today you would earn a total of  316.00  from holding Clairvest Group or generate 4.41% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Together
Strength	Insignificant
Accuracy	98.44%
Values	Daily Returns

Clarke Inc  vs.  Clairvest Group

Clarke Inc

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Clarke Inc has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of very healthy forward indicators, Clarke is not utilizing all of its potentials. The recent stock price disarray, may contribute to short-term losses for the investors.

Clairvest Group

Risk-Adjusted Performance

6 of 100

Modest

Compared to the overall equity markets, risk-adjusted returns on investments in Clairvest Group are ranked lower than 6 (%) of all global equities and portfolios over the last 90 days. In spite of very healthy technical and fundamental indicators, Clairvest is not utilizing all of its potentials. The recent stock price disarray, may contribute to short-term losses for the investors.

Pair Trading with Clarke and Clairvest

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

The idea behind Clarke Inc and Clairvest Group 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 Volatility Analysis module to get historical volatility and risk analysis based on latest market data.