Correlation Between Clairvest and Propel Holdings

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

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

Diversification Opportunities for Clairvest and Propel Holdings

0.06

Correlation Coefficient

Clairvest  Propel Holdings

Significant diversification

The 3 months correlation between Clairvest and Propel is 0.06. Overlapping area represents the amount of risk that can be diversified away by holding Clairvest Group and Propel Holdings in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Propel Holdings and Clairvest 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 Clairvest Group are associated (or correlated) with Propel Holdings. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Propel Holdings has no effect on the direction of Clairvest i.e., Clairvest and Propel Holdings go up and down completely randomly.

Pair Corralation between Clairvest and Propel Holdings

Assuming the 90 days trading horizon Clairvest Group is expected to generate 0.51 times more return on investment than Propel Holdings. However, Clairvest Group is 1.94 times less risky than Propel Holdings. It trades about -0.05 of its potential returns per unit of risk. Propel Holdings is currently generating about -0.04 per unit of risk. If you would invest  7,100  in Clairvest Group on September 24, 2024 and sell it today you would lose (145.00) from holding Clairvest Group or give up 2.04% of portfolio value over 90 days.

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

Clairvest Group  vs.  Propel Holdings

Clairvest Group

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Clairvest Group has generated negative risk-adjusted returns adding no value to investors with long positions. 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.

Propel Holdings

Risk-Adjusted Performance

6 of 100

Modest

Compared to the overall equity markets, risk-adjusted returns on investments in Propel Holdings are ranked lower than 6 (%) of all global equities and portfolios over the last 90 days. In spite of very unfluctuating essential indicators, Propel Holdings displayed solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with Clairvest and Propel Holdings

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

The idea behind Clairvest Group and Propel Holdings 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 Idea Optimizer module to use advanced portfolio builder with pre-computed micro ideas to build optimal portfolio .