Correlation Between Valens and CAVA Group,

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

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

Diversification Opportunities for Valens and CAVA Group,

-0.26

Correlation Coefficient

Valens  CAVA Group,

Very good diversification

The 3 months correlation between Valens and CAVA is -0.26. Overlapping area represents the amount of risk that can be diversified away by holding Valens and CAVA Group, in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on CAVA Group, and Valens 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 Valens are associated (or correlated) with CAVA Group,. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of CAVA Group, has no effect on the direction of Valens i.e., Valens and CAVA Group, go up and down completely randomly.

Pair Corralation between Valens and CAVA Group,

Considering the 90-day investment horizon Valens is expected to generate 1.71 times more return on investment than CAVA Group,. However, Valens is 1.71 times more volatile than CAVA Group,. It trades about 0.08 of its potential returns per unit of risk. CAVA Group, is currently generating about -0.25 per unit of risk. If you would invest  180.00  in Valens on September 26, 2024 and sell it today you would earn a total of  12.00  from holding Valens or generate 6.67% return on investment over 90 days.

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

Valens  vs.  CAVA Group,

Valens

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Valens has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of latest weak performance, the Stock's essential indicators remain healthy and the recent disarray on Wall Street may also be a sign of long period gains for the firm investors.

CAVA Group,

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days CAVA Group, has generated negative risk-adjusted returns adding no value to investors with long positions. Despite somewhat strong basic indicators, CAVA Group, is not utilizing all of its potentials. The newest stock price disturbance, may contribute to short-term losses for the investors.

Pair Trading with Valens and CAVA Group,

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

The idea behind Valens and CAVA Group, 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 Portfolio File Import module to quickly import all of your third-party portfolios from your local drive in csv format.