Correlation Between CVB Financial and Indutrade
Can any of the company-specific risk be diversified away by investing in both CVB Financial and Indutrade 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 CVB Financial and Indutrade into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between CVB Financial Corp and Indutrade AB, you can compare the effects of market volatilities on CVB Financial and Indutrade 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 CVB Financial with a short position of Indutrade. Check out your portfolio center. Please also check ongoing floating volatility patterns of CVB Financial and Indutrade.
Diversification Opportunities for CVB Financial and Indutrade
-0.7 | Correlation Coefficient |
Excellent diversification
The 3 months correlation between CVB and Indutrade is -0.7. Overlapping area represents the amount of risk that can be diversified away by holding CVB Financial Corp and Indutrade AB in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Indutrade AB and CVB Financial 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 CVB Financial Corp are associated (or correlated) with Indutrade. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Indutrade AB has no effect on the direction of CVB Financial i.e., CVB Financial and Indutrade go up and down completely randomly.
Pair Corralation between CVB Financial and Indutrade
Assuming the 90 days horizon CVB Financial is expected to generate 2.97 times less return on investment than Indutrade. In addition to that, CVB Financial is 1.17 times more volatile than Indutrade AB. It trades about 0.02 of its total potential returns per unit of risk. Indutrade AB is currently generating about 0.08 per unit of volatility. If you would invest 1,874 in Indutrade AB on December 12, 2024 and sell it today you would earn a total of 886.00 from holding Indutrade AB or generate 47.28% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
CVB Financial Corp vs. Indutrade AB
Performance |
| Timeline |
| CVB Financial Corp |
| Indutrade AB |
CVB Financial and Indutrade Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with CVB Financial and Indutrade
The main advantage of trading using opposite CVB Financial and Indutrade positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if CVB Financial position performs unexpectedly, Indutrade 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 Indutrade will offset losses from the drop in Indutrade's long position.| CVB Financial vs. POSBO UNSPADRS20YC1 | ||
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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 Equity Forecasting module to use basic forecasting models to generate price predictions and determine price momentum.
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