Correlation Between Clean Earth and NorthView Acquisition

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

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

Diversification Opportunities for Clean Earth and NorthView Acquisition

0.37

Correlation Coefficient

Clean Earth  NorthView Acquisition

Weak diversification

The 3 months correlation between Clean and NorthView is 0.37. Overlapping area represents the amount of risk that can be diversified away by holding Clean Earth Acquisitions and NorthView Acquisition in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on NorthView Acquisition and Clean Earth 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 Clean Earth Acquisitions are associated (or correlated) with NorthView Acquisition. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of NorthView Acquisition has no effect on the direction of Clean Earth i.e., Clean Earth and NorthView Acquisition go up and down completely randomly.

Pair Corralation between Clean Earth and NorthView Acquisition

If you would invest  2.75  in NorthView Acquisition on October 12, 2024 and sell it today you would earn a total of  5.74  from holding NorthView Acquisition or generate 208.73% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Together
Strength	Very Weak
Accuracy	8.33%
Values	Daily Returns

Clean Earth Acquisitions  vs.  NorthView Acquisition

Clean Earth Acquisitions

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Clean Earth Acquisitions has generated negative risk-adjusted returns adding no value to investors with long positions. Even with relatively invariable basic indicators, Clean Earth is not utilizing all of its potentials. The latest stock price agitation, may contribute to short-term losses for the retail investors.

NorthView Acquisition

Risk-Adjusted Performance

0 of 100

Good

Over the last 90 days NorthView Acquisition has generated negative risk-adjusted returns adding no value to investors with long positions. Even with relatively weak fundamental indicators, NorthView Acquisition reported solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with Clean Earth and NorthView Acquisition

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

The idea behind Clean Earth Acquisitions and NorthView Acquisition 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 Portfolio Backtesting module to avoid under-diversification and over-optimization by backtesting your portfolios.