Correlation Between Defiance Silver and CVW CleanTech

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

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

Diversification Opportunities for Defiance Silver and CVW CleanTech

-0.44

Correlation Coefficient

Defiance Silver  CVW CleanTech

Very good diversification

The 3 months correlation between Defiance and CVW is -0.44. Overlapping area represents the amount of risk that can be diversified away by holding Defiance Silver Corp and CVW CleanTech in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on CVW CleanTech and Defiance Silver 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 Defiance Silver Corp are associated (or correlated) with CVW CleanTech. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of CVW CleanTech has no effect on the direction of Defiance Silver i.e., Defiance Silver and CVW CleanTech go up and down completely randomly.

Pair Corralation between Defiance Silver and CVW CleanTech

Assuming the 90 days horizon Defiance Silver Corp is expected to under-perform the CVW CleanTech. In addition to that, Defiance Silver is 2.1 times more volatile than CVW CleanTech. It trades about -0.03 of its total potential returns per unit of risk. CVW CleanTech is currently generating about -0.02 per unit of volatility. If you would invest  90.00  in CVW CleanTech on October 5, 2024 and sell it today you would lose (2.00) from holding CVW CleanTech or give up 2.22% of portfolio value over 90 days.

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

Defiance Silver Corp  vs.  CVW CleanTech

Defiance Silver Corp

Risk-Adjusted Performance

0 of 100

Very Weak

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

CVW CleanTech

Risk-Adjusted Performance

3 of 100

Weak

Compared to the overall equity markets, risk-adjusted returns on investments in CVW CleanTech are ranked lower than 3 (%) of all global equities and portfolios over the last 90 days. In spite of fairly unfluctuating basic indicators, CVW CleanTech may actually be approaching a critical reversion point that can send shares even higher in February 2025.

Pair Trading with Defiance Silver and CVW CleanTech

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

The idea behind Defiance Silver Corp and CVW CleanTech 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 Price Transformation module to use Price Transformation models to analyze the depth of different equity instruments across global markets.