Correlation Between CVW CleanTech and Thinkific Labs

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

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

Diversification Opportunities for CVW CleanTech and Thinkific Labs

0.59

Correlation Coefficient

CVW CleanTech  Thinkific Labs

Very weak diversification

The 3 months correlation between CVW and Thinkific is 0.59. Overlapping area represents the amount of risk that can be diversified away by holding CVW CleanTech and Thinkific Labs in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Thinkific Labs and CVW CleanTech 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 CVW CleanTech are associated (or correlated) with Thinkific Labs. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Thinkific Labs has no effect on the direction of CVW CleanTech i.e., CVW CleanTech and Thinkific Labs go up and down completely randomly.

Pair Corralation between CVW CleanTech and Thinkific Labs

Assuming the 90 days horizon CVW CleanTech is expected to generate 25.24 times less return on investment than Thinkific Labs. But when comparing it to its historical volatility, CVW CleanTech is 1.02 times less risky than Thinkific Labs. It trades about 0.0 of its potential returns per unit of risk. Thinkific Labs is currently generating about 0.06 of returns per unit of risk over similar time horizon. If you would invest  291.00  in Thinkific Labs on October 11, 2024 and sell it today you would earn a total of  17.00  from holding Thinkific Labs or generate 5.84% return on investment over 90 days.

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

CVW CleanTech  vs.  Thinkific Labs

CVW CleanTech

Risk-Adjusted Performance

0 of 100

Weak

Over the last 90 days CVW CleanTech has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of fairly stable basic indicators, CVW CleanTech is not utilizing all of its potentials. The latest stock price fuss, may contribute to near-short-term losses for the sophisticated investors.

Thinkific Labs

Risk-Adjusted Performance

7 of 100

OK

Compared to the overall equity markets, risk-adjusted returns on investments in Thinkific Labs are ranked lower than 7 (%) of all global equities and portfolios over the last 90 days. In spite of very abnormal basic indicators, Thinkific Labs displayed solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with CVW CleanTech and Thinkific Labs

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

The idea behind CVW CleanTech and Thinkific Labs 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 Fundamental Analysis module to view fundamental data based on most recent published financial statements.