Correlation Between CVW CLEANTECH and Daimler Truck

Can any of the company-specific risk be diversified away by investing in both CVW CLEANTECH and Daimler Truck 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 Daimler Truck 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 Daimler Truck Holding, you can compare the effects of market volatilities on CVW CLEANTECH and Daimler Truck 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 Daimler Truck. Check out your portfolio center. Please also check ongoing floating volatility patterns of CVW CLEANTECH and Daimler Truck.

Diversification Opportunities for CVW CLEANTECH and Daimler Truck

-0.05

Correlation Coefficient

CVW CLEANTECH  Daimler Truck

Good diversification

The 3 months correlation between CVW and Daimler is -0.05. Overlapping area represents the amount of risk that can be diversified away by holding CVW CLEANTECH INC and Daimler Truck Holding in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Daimler Truck Holding 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 Daimler Truck. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Daimler Truck Holding has no effect on the direction of CVW CLEANTECH i.e., CVW CLEANTECH and Daimler Truck go up and down completely randomly.

Pair Corralation between CVW CLEANTECH and Daimler Truck

Assuming the 90 days trading horizon CVW CLEANTECH INC is expected to generate 1.72 times more return on investment than Daimler Truck. However, CVW CLEANTECH is 1.72 times more volatile than Daimler Truck Holding. It trades about 0.02 of its potential returns per unit of risk. Daimler Truck Holding is currently generating about 0.02 per unit of risk. If you would invest  60.00  in CVW CLEANTECH INC on October 4, 2024 and sell it today you would earn a total of  1.00  from holding CVW CLEANTECH INC or generate 1.67% return on investment over 90 days.

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

CVW CLEANTECH INC  vs.  Daimler Truck Holding

CVW CLEANTECH INC

Risk-Adjusted Performance

5 of 100

Modest

Compared to the overall equity markets, risk-adjusted returns on investments in CVW CLEANTECH INC are ranked lower than 5 (%) of all global equities and portfolios over the last 90 days. Despite nearly fragile fundamental indicators, CVW CLEANTECH may actually be approaching a critical reversion point that can send shares even higher in February 2025.

Daimler Truck Holding

Risk-Adjusted Performance

5 of 100

Modest

Compared to the overall equity markets, risk-adjusted returns on investments in Daimler Truck Holding are ranked lower than 5 (%) of all global equities and portfolios over the last 90 days. In spite of comparatively fragile technical and fundamental indicators, Daimler Truck may actually be approaching a critical reversion point that can send shares even higher in February 2025.

Pair Trading with CVW CLEANTECH and Daimler Truck

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

The idea behind CVW CLEANTECH INC and Daimler Truck Holding 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 Sectors module to list of equity sectors categorizing publicly traded companies based on their primary business activities.