Correlation Between Rogers Communications and CVW CleanTech

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

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

Diversification Opportunities for Rogers Communications and CVW CleanTech

-0.47

Correlation Coefficient

Rogers Communications  CVW CleanTech

Very good diversification

The 3 months correlation between Rogers and CVW is -0.47. Overlapping area represents the amount of risk that can be diversified away by holding Rogers Communications and CVW CleanTech in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on CVW CleanTech and Rogers Communications 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 Rogers Communications 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 Rogers Communications i.e., Rogers Communications and CVW CleanTech go up and down completely randomly.

Pair Corralation between Rogers Communications and CVW CleanTech

Assuming the 90 days trading horizon Rogers Communications is expected to under-perform the CVW CleanTech. But the stock apears to be less risky and, when comparing its historical volatility, Rogers Communications is 2.54 times less risky than CVW CleanTech. The stock trades about -0.58 of its potential returns per unit of risk. The CVW CleanTech is currently generating about 0.16 of returns per unit of risk over similar time horizon. If you would invest  86.00  in CVW CleanTech on September 29, 2024 and sell it today you would earn a total of  8.00  from holding CVW CleanTech or generate 9.3% return on investment over 90 days.

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

Rogers Communications  vs.  CVW CleanTech

Rogers Communications

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Rogers Communications has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of abnormal performance in the last few months, the Stock's basic indicators remain comparatively stable which may send shares a bit higher in January 2025. The newest uproar may also be a sign of mid-term up-swing for the firm private investors.

CVW CleanTech

Risk-Adjusted Performance

7 of 100

OK

Compared to the overall equity markets, risk-adjusted returns on investments in CVW CleanTech are ranked lower than 7 (%) of all global equities and portfolios over the last 90 days. In spite of fairly abnormal basic indicators, CVW CleanTech showed solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with Rogers Communications and CVW CleanTech

The main advantage of trading using opposite Rogers Communications and CVW CleanTech positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Rogers Communications 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 Rogers Communications 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 Investing Opportunities module to build portfolios using our predefined set of ideas and optimize them against your investing preferences.