Correlation Between CubicFarm Systems and CEA Industries
Can any of the company-specific risk be diversified away by investing in both CubicFarm Systems and CEA Industries 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 CubicFarm Systems and CEA Industries into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between CubicFarm Systems Corp and CEA Industries Warrant, you can compare the effects of market volatilities on CubicFarm Systems and CEA Industries 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 CubicFarm Systems with a short position of CEA Industries. Check out your portfolio center. Please also check ongoing floating volatility patterns of CubicFarm Systems and CEA Industries.
Diversification Opportunities for CubicFarm Systems and CEA Industries
0.29 | Correlation Coefficient |
Modest diversification
The 3 months correlation between CubicFarm and CEA is 0.29. Overlapping area represents the amount of risk that can be diversified away by holding CubicFarm Systems Corp and CEA Industries Warrant in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on CEA Industries Warrant and CubicFarm Systems 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 CubicFarm Systems Corp are associated (or correlated) with CEA Industries. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of CEA Industries Warrant has no effect on the direction of CubicFarm Systems i.e., CubicFarm Systems and CEA Industries go up and down completely randomly.
Pair Corralation between CubicFarm Systems and CEA Industries
Assuming the 90 days horizon CubicFarm Systems Corp is expected to generate 1.15 times more return on investment than CEA Industries. However, CubicFarm Systems is 1.15 times more volatile than CEA Industries Warrant. It trades about 0.2 of its potential returns per unit of risk. CEA Industries Warrant is currently generating about 0.18 per unit of risk. If you would invest 8.00 in CubicFarm Systems Corp on December 5, 2024 and sell it today you would earn a total of 17.00 from holding CubicFarm Systems Corp or generate 212.5% return on investment over 90 days.
Time Period | 3 Months [change] |
Direction | Moves Together |
Strength | Very Weak |
Accuracy | 60.0% |
Values | Daily Returns |
CubicFarm Systems Corp vs. CEA Industries Warrant
Performance |
Timeline |
CubicFarm Systems Corp |
CEA Industries Warrant |
CubicFarm Systems and CEA Industries Volatility Contrast
Predicted Return Density |
Returns |
Pair Trading with CubicFarm Systems and CEA Industries
The main advantage of trading using opposite CubicFarm Systems and CEA Industries positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if CubicFarm Systems position performs unexpectedly, CEA Industries 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 CEA Industries will offset losses from the drop in CEA Industries' long position.CubicFarm Systems vs. Nikola Corp | CubicFarm Systems vs. Buhler Industries | CubicFarm Systems vs. CEA Industries Warrant | CubicFarm Systems vs. Toyota Industries |
CEA Industries vs. CEA Industries | CEA Industries vs. Thayer Ventures Acquisition | CEA Industries vs. Iveda Solutions Warrant |
Check out your portfolio center.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 Instant Ratings module to determine any equity ratings based on digital recommendations. Macroaxis instant equity ratings are based on combination of fundamental analysis and risk-adjusted market performance.
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