Correlation Between Intevac and CVD Equipment

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

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

Diversification Opportunities for Intevac and CVD Equipment

0.46

Correlation Coefficient

Intevac  CVD Equipment

Very weak diversification

The 3 months correlation between Intevac and CVD is 0.46. Overlapping area represents the amount of risk that can be diversified away by holding Intevac and CVD Equipment in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on CVD Equipment and Intevac 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 Intevac are associated (or correlated) with CVD Equipment. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of CVD Equipment has no effect on the direction of Intevac i.e., Intevac and CVD Equipment go up and down completely randomly.

Pair Corralation between Intevac and CVD Equipment

Given the investment horizon of 90 days Intevac is expected to under-perform the CVD Equipment. But the stock apears to be less risky and, when comparing its historical volatility, Intevac is 1.72 times less risky than CVD Equipment. The stock trades about -0.04 of its potential returns per unit of risk. The CVD Equipment is currently generating about 0.0 of returns per unit of risk over similar time horizon. If you would invest  571.00  in CVD Equipment on September 3, 2024 and sell it today you would lose (252.00) from holding CVD Equipment or give up 44.13% of portfolio value over 90 days.

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

Intevac  vs.  CVD Equipment

Intevac

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Intevac has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of unsteady performance in the last few months, the Stock's basic indicators remain rather sound which may send shares a bit higher in January 2025. The latest tumult may also be a sign of longer-term up-swing for the firm shareholders.

CVD Equipment

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days CVD Equipment has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of latest weak performance, the Stock's basic indicators remain stable and the latest fuss on Wall Street may also be a sign of long-term gains for the venture sophisticated investors.

Pair Trading with Intevac and CVD Equipment

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

The idea behind Intevac and CVD Equipment 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.

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 Competition Analyzer module to analyze and compare many basic indicators for a group of related or unrelated entities.