Correlation Between Sustainable Innovation and CDSPI Petite

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

By analyzing existing cross correlation between Sustainable Innovation Health and CDSPI petite cap, you can compare the effects of market volatilities on Sustainable Innovation and CDSPI Petite 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 Sustainable Innovation with a short position of CDSPI Petite. Check out your portfolio center. Please also check ongoing floating volatility patterns of Sustainable Innovation and CDSPI Petite.

Diversification Opportunities for Sustainable Innovation and CDSPI Petite

0.32

Correlation Coefficient

Sustainable Innovation  CDSPI Petite

Weak diversification

The 3 months correlation between Sustainable and CDSPI is 0.32. Overlapping area represents the amount of risk that can be diversified away by holding Sustainable Innovation Health and CDSPI petite cap in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on CDSPI petite cap and Sustainable Innovation 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 Sustainable Innovation Health are associated (or correlated) with CDSPI Petite. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of CDSPI petite cap has no effect on the direction of Sustainable Innovation i.e., Sustainable Innovation and CDSPI Petite go up and down completely randomly.

Pair Corralation between Sustainable Innovation and CDSPI Petite

Assuming the 90 days trading horizon Sustainable Innovation Health is expected to generate 0.72 times more return on investment than CDSPI Petite. However, Sustainable Innovation Health is 1.4 times less risky than CDSPI Petite. It trades about 0.3 of its potential returns per unit of risk. CDSPI petite cap is currently generating about -0.22 per unit of risk. If you would invest  1,339  in Sustainable Innovation Health on October 12, 2024 and sell it today you would earn a total of  54.00  from holding Sustainable Innovation Health or generate 4.03% return on investment over 90 days.

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

Sustainable Innovation Health  vs.  CDSPI petite cap

Sustainable Innovation

Risk-Adjusted Performance

10 of 100

OK

Compared to the overall equity markets, risk-adjusted returns on investments in Sustainable Innovation Health are ranked lower than 10 (%) of all funds and portfolios of funds over the last 90 days. Despite somewhat weak technical indicators, Sustainable Innovation may actually be approaching a critical reversion point that can send shares even higher in February 2025.

CDSPI petite cap

Risk-Adjusted Performance

6 of 100

Modest

Compared to the overall equity markets, risk-adjusted returns on investments in CDSPI petite cap are ranked lower than 6 (%) of all funds and portfolios of funds over the last 90 days. Despite somewhat strong basic indicators, CDSPI Petite is not utilizing all of its potentials. The current stock price disturbance, may contribute to short-term losses for the investors.

Pair Trading with Sustainable Innovation and CDSPI Petite

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

The idea behind Sustainable Innovation Health and CDSPI petite cap 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 Headlines Timeline module to stay connected to all market stories and filter out noise. Drill down to analyze hype elasticity.