Correlation Between CVW CLEANTECH and KeyCorp

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

Diversification Opportunities for CVW CLEANTECH and KeyCorp

0.53

Correlation Coefficient

CVW CLEANTECH  KeyCorp

Very weak diversification

The 3 months correlation between CVW and KeyCorp is 0.53. Overlapping area represents the amount of risk that can be diversified away by holding CVW CLEANTECH INC and KeyCorp in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on KeyCorp 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 KeyCorp. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of KeyCorp has no effect on the direction of CVW CLEANTECH i.e., CVW CLEANTECH and KeyCorp go up and down completely randomly.

Pair Corralation between CVW CLEANTECH and KeyCorp

Assuming the 90 days trading horizon CVW CLEANTECH INC is expected to generate 2.46 times more return on investment than KeyCorp. However, CVW CLEANTECH is 2.46 times more volatile than KeyCorp. It trades about 0.13 of its potential returns per unit of risk. KeyCorp is currently generating about -0.44 per unit of risk. If you would invest  57.00  in CVW CLEANTECH INC on October 3, 2024 and sell it today you would earn a total of  4.00  from holding CVW CLEANTECH INC or generate 7.02% return on investment over 90 days.

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

CVW CLEANTECH INC  vs.  KeyCorp

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.

KeyCorp

Risk-Adjusted Performance

8 of 100

OK

Compared to the overall equity markets, risk-adjusted returns on investments in KeyCorp are ranked lower than 8 (%) of all global equities and portfolios over the last 90 days. Despite nearly fragile basic indicators, KeyCorp reported solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with CVW CLEANTECH and KeyCorp

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

The idea behind CVW CLEANTECH INC and KeyCorp 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..