Correlation Between EZFL Old and Clearwater Analytics

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

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

Diversification Opportunities for EZFL Old and Clearwater Analytics

0.42

Correlation Coefficient

EZFL Old  Clearwater Analytics

Very weak diversification

The 3 months correlation between EZFL and Clearwater is 0.42. Overlapping area represents the amount of risk that can be diversified away by holding EZFL Old and Clearwater Analytics Holdings in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Clearwater Analytics and EZFL Old 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 EZFL Old are associated (or correlated) with Clearwater Analytics. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Clearwater Analytics has no effect on the direction of EZFL Old i.e., EZFL Old and Clearwater Analytics go up and down completely randomly.

Pair Corralation between EZFL Old and Clearwater Analytics

Given the investment horizon of 90 days EZFL Old is expected to generate 3.04 times more return on investment than Clearwater Analytics. However, EZFL Old is 3.04 times more volatile than Clearwater Analytics Holdings. It trades about 0.06 of its potential returns per unit of risk. Clearwater Analytics Holdings is currently generating about -0.02 per unit of risk. If you would invest  332.00  in EZFL Old on December 30, 2024 and sell it today you would earn a total of  18.00  from holding EZFL Old or generate 5.42% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Together
Strength	Weak
Accuracy	51.61%
Values	Daily Returns

EZFL Old  vs.  Clearwater Analytics Holdings

EZFL Old

Risk-Adjusted Performance

Insignificant

Over the last 90 days EZFL Old has generated negative risk-adjusted returns adding no value to investors with long positions. Despite quite conflicting technical and fundamental indicators, EZFL Old disclosed solid returns over the last few months and may actually be approaching a breakup point.

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.

Pair Trading with EZFL Old and Clearwater Analytics

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

The idea behind EZFL Old and Clearwater Analytics Holdings 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 Portfolio Analyzer module to portfolio analysis module that provides access to portfolio diagnostics and optimization engine.