Correlation Between ClearSign Combustion and Urban One

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

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

Diversification Opportunities for ClearSign Combustion and Urban One

0.81

Correlation Coefficient

ClearSign Combustion  Urban One

Very poor diversification

The 3 months correlation between ClearSign and Urban is 0.81. Overlapping area represents the amount of risk that can be diversified away by holding ClearSign Combustion and Urban One Class in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Urban One Class and ClearSign Combustion 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 ClearSign Combustion are associated (or correlated) with Urban One. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Urban One Class has no effect on the direction of ClearSign Combustion i.e., ClearSign Combustion and Urban One go up and down completely randomly.

Pair Corralation between ClearSign Combustion and Urban One

Given the investment horizon of 90 days ClearSign Combustion is expected to under-perform the Urban One. In addition to that, ClearSign Combustion is 1.48 times more volatile than Urban One Class. It trades about -0.16 of its total potential returns per unit of risk. Urban One Class is currently generating about -0.11 per unit of volatility. If you would invest  98.00  in Urban One Class on December 29, 2024 and sell it today you would lose (25.00) from holding Urban One Class or give up 25.51% of portfolio value over 90 days.

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

ClearSign Combustion  vs.  Urban One Class

ClearSign Combustion

Risk-Adjusted Performance

Very Weak

Over the last 90 days ClearSign Combustion has generated negative risk-adjusted returns adding no value to investors with long positions. Even with conflicting performance in the last few months, the Stock's forward indicators remain relatively invariable which may send shares a bit higher in April 2025. The latest agitation may also be a sign of long-running up-swing for the enterprise retail investors.

Urban One Class

Risk-Adjusted Performance

Very Weak

Over the last 90 days Urban One Class has generated negative risk-adjusted returns adding no value to investors with long positions. Despite sluggish performance in the last few months, the Stock's technical and fundamental 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.

Pair Trading with ClearSign Combustion and Urban One

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

The idea behind ClearSign Combustion and Urban One Class 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.