Correlation Between CVW CLEANTECH and AutoZone

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

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

Diversification Opportunities for CVW CLEANTECH and AutoZone

0.6

Correlation Coefficient

CVW CLEANTECH  AutoZone

Poor diversification

The 3 months correlation between CVW and AutoZone is 0.6. Overlapping area represents the amount of risk that can be diversified away by holding CVW CLEANTECH INC and AutoZone in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on AutoZone and CVW CLEANTECH 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 CVW CLEANTECH INC are associated (or correlated) with AutoZone. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of AutoZone has no effect on the direction of CVW CLEANTECH i.e., CVW CLEANTECH and AutoZone go up and down completely randomly.

Pair Corralation between CVW CLEANTECH and AutoZone

Assuming the 90 days trading horizon CVW CLEANTECH is expected to generate 1.25 times less return on investment than AutoZone. In addition to that, CVW CLEANTECH is 3.51 times more volatile than AutoZone. It trades about 0.01 of its total potential returns per unit of risk. AutoZone is currently generating about 0.06 per unit of volatility. If you would invest  223,300  in AutoZone on October 22, 2024 and sell it today you would earn a total of  90,300  from holding AutoZone or generate 40.44% return on investment over 90 days.

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

CVW CLEANTECH INC  vs.  AutoZone

CVW CLEANTECH INC

Risk-Adjusted Performance

1 of 100

Insignificant

Compared to the overall equity markets, risk-adjusted returns on investments in CVW CLEANTECH INC are ranked lower than 1 (%) of all global equities and portfolios over the last 90 days. Despite nearly stable fundamental indicators, CVW CLEANTECH is not utilizing all of its potentials. The newest stock price disturbance, may contribute to mid-run losses for the stockholders.

AutoZone

Risk-Adjusted Performance

6 of 100

Modest

Compared to the overall equity markets, risk-adjusted returns on investments in AutoZone are ranked lower than 6 (%) of all global equities and portfolios over the last 90 days. Despite nearly uncertain basic indicators, AutoZone may actually be approaching a critical reversion point that can send shares even higher in February 2025.

Pair Trading with CVW CLEANTECH and AutoZone

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

The idea behind CVW CLEANTECH INC and AutoZone 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 Stock Screener module to find equities using a custom stock filter or screen asymmetry in trading patterns, price, volume, or investment outlook..