Correlation Between CVW CleanTech and Verde Clean

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

By analyzing existing cross correlation between CVW CleanTech and Verde Clean Fuels, you can compare the effects of market volatilities on CVW CleanTech and Verde Clean 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 Verde Clean. Check out your portfolio center. Please also check ongoing floating volatility patterns of CVW CleanTech and Verde Clean.

Diversification Opportunities for CVW CleanTech and Verde Clean

-0.33

Correlation Coefficient

CVW CleanTech  Verde Clean

Very good diversification

The 3 months correlation between CVW and Verde is -0.33. Overlapping area represents the amount of risk that can be diversified away by holding CVW CleanTech and Verde Clean Fuels in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Verde Clean Fuels 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 Verde Clean. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Verde Clean Fuels has no effect on the direction of CVW CleanTech i.e., CVW CleanTech and Verde Clean go up and down completely randomly.

Pair Corralation between CVW CleanTech and Verde Clean

Assuming the 90 days horizon CVW CleanTech is expected to generate 0.62 times more return on investment than Verde Clean. However, CVW CleanTech is 1.6 times less risky than Verde Clean. It trades about 0.01 of its potential returns per unit of risk. Verde Clean Fuels is currently generating about -0.16 per unit of risk. If you would invest  62.00  in CVW CleanTech on September 18, 2024 and sell it today you would earn a total of  0.00  from holding CVW CleanTech or generate 0.0% return on investment over 90 days.

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

CVW CleanTech  vs.  Verde Clean Fuels

CVW CleanTech

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days CVW CleanTech has generated negative risk-adjusted returns adding no value to investors with long positions. Despite latest weak performance, the Stock's technical and fundamental indicators remain stable and the current disturbance on Wall Street may also be a sign of long-run gains for the company stockholders.

Verde Clean Fuels

Risk-Adjusted Performance

2 of 100

Weak

Compared to the overall equity markets, risk-adjusted returns on investments in Verde Clean Fuels are ranked lower than 2 (%) of all global equities and portfolios over the last 90 days. In spite of comparatively abnormal basic indicators, Verde Clean may actually be approaching a critical reversion point that can send shares even higher in January 2025.

Pair Trading with CVW CleanTech and Verde Clean

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

The idea behind CVW CleanTech and Verde Clean Fuels 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 Top Crypto Exchanges module to search and analyze digital assets across top global cryptocurrency exchanges.