Correlation Between CVW CleanTech and Cool
Can any of the company-specific risk be diversified away by investing in both CVW CleanTech and Cool 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 Cool into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between CVW CleanTech and Cool Company, you can compare the effects of market volatilities on CVW CleanTech and Cool 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 Cool. Check out your portfolio center. Please also check ongoing floating volatility patterns of CVW CleanTech and Cool.
Diversification Opportunities for CVW CleanTech and Cool
0.24 | Correlation Coefficient |
Modest diversification
The 3 months correlation between CVW and Cool is 0.24. Overlapping area represents the amount of risk that can be diversified away by holding CVW CleanTech and Cool Company in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Cool Company 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 Cool. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Cool Company has no effect on the direction of CVW CleanTech i.e., CVW CleanTech and Cool go up and down completely randomly.
Pair Corralation between CVW CleanTech and Cool
Assuming the 90 days horizon CVW CleanTech is expected to generate 1.95 times more return on investment than Cool. However, CVW CleanTech is 1.95 times more volatile than Cool Company. It trades about 0.05 of its potential returns per unit of risk. Cool Company is currently generating about -0.19 per unit of risk. If you would invest 57.00 in CVW CleanTech on December 27, 2024 and sell it today you would earn a total of 4.00 from holding CVW CleanTech or generate 7.02% return on investment over 90 days.
Time Period | 3 Months [change] |
Direction | Moves Together |
Strength | Very Weak |
Accuracy | 100.0% |
Values | Daily Returns |
CVW CleanTech vs. Cool Company
Performance |
Timeline |
CVW CleanTech |
Cool Company |
CVW CleanTech and Cool Volatility Contrast
Predicted Return Density |
Returns |
Pair Trading with CVW CleanTech and Cool
The main advantage of trading using opposite CVW CleanTech and Cool positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if CVW CleanTech position performs unexpectedly, Cool 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 Cool will offset losses from the drop in Cool's long position.CVW CleanTech vs. Ark Restaurants Corp | CVW CleanTech vs. BJs Restaurants | CVW CleanTech vs. GEN Restaurant Group, | CVW CleanTech vs. Western Digital |
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 Portfolio Anywhere module to track or share privately all of your investments from the convenience of any device.
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