Correlation Between Near and CVP

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

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

Diversification Opportunities for Near and CVP

0.76

Correlation Coefficient

Near  CVP

Poor diversification

The 3 months correlation between Near and CVP is 0.76. Overlapping area represents the amount of risk that can be diversified away by holding Near and CVP in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on CVP and Near 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 Near are associated (or correlated) with CVP. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of CVP has no effect on the direction of Near i.e., Near and CVP go up and down completely randomly.

Pair Corralation between Near and CVP

Assuming the 90 days trading horizon Near is expected to generate 0.26 times more return on investment than CVP. However, Near is 3.81 times less risky than CVP. It trades about -0.11 of its potential returns per unit of risk. CVP is currently generating about -0.04 per unit of risk. If you would invest  490.00  in Near on December 28, 2024 and sell it today you would lose (217.00) from holding Near or give up 44.29% of portfolio value over 90 days.

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

Near  vs.  CVP

Near

Risk-Adjusted Performance

Very Weak

Over the last 90 days Near 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 Crypto's fundamental indicators remain rather sound which may send shares a bit higher in April 2025. The latest tumult may also be a sign of longer-term up-swing for Near shareholders.

CVP

Risk-Adjusted Performance

Very Weak

Over the last 90 days CVP 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 Crypto's basic indicators remain rather sound which may send shares a bit higher in April 2025. The latest tumult may also be a sign of longer-term up-swing for CVP shareholders.

Pair Trading with Near and CVP

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

The idea behind Near and CVP 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 Suggestion module to get suggestions outside of your existing asset allocation including your own model portfolios.