Correlation Between Clearwater Analytics and TROOPS

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

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

Diversification Opportunities for Clearwater Analytics and TROOPS

0.11

Correlation Coefficient

Clearwater Analytics  TROOPS

Average diversification

The 3 months correlation between Clearwater and TROOPS is 0.11. Overlapping area represents the amount of risk that can be diversified away by holding Clearwater Analytics Holdings and TROOPS Inc in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on TROOPS Inc and Clearwater Analytics 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 Clearwater Analytics Holdings are associated (or correlated) with TROOPS. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of TROOPS Inc has no effect on the direction of Clearwater Analytics i.e., Clearwater Analytics and TROOPS go up and down completely randomly.

Pair Corralation between Clearwater Analytics and TROOPS

Given the investment horizon of 90 days Clearwater Analytics Holdings is expected to generate 0.42 times more return on investment than TROOPS. However, Clearwater Analytics Holdings is 2.39 times less risky than TROOPS. It trades about -0.02 of its potential returns per unit of risk. TROOPS Inc is currently generating about -0.19 per unit of risk. If you would invest  2,767  in Clearwater Analytics Holdings on December 30, 2024 and sell it today you would lose (114.00) from holding Clearwater Analytics Holdings or give up 4.12% of portfolio value over 90 days.

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

Clearwater Analytics Holdings  vs.  TROOPS Inc

Clearwater Analytics

Risk-Adjusted Performance

Very Weak

Over the last 90 days Clearwater Analytics Holdings has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of very healthy basic indicators, Clearwater Analytics is not utilizing all of its potentials. The current stock price disarray, may contribute to short-term losses for the investors.

TROOPS Inc

Risk-Adjusted Performance

Very Weak

Over the last 90 days TROOPS Inc has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of fragile performance in the last few months, the Stock's basic indicators remain very healthy which may send shares a bit higher in April 2025. The recent disarray may also be a sign of long period up-swing for the firm investors.

Pair Trading with Clearwater Analytics and TROOPS

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

The idea behind Clearwater Analytics Holdings and TROOPS Inc 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 .