Correlation Between CAVA Group, and ARCA Japan
Can any of the company-specific risk be diversified away by investing in both CAVA Group, and ARCA Japan 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 CAVA Group, and ARCA Japan into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between CAVA Group, and ARCA Japan, you can compare the effects of market volatilities on CAVA Group, and ARCA Japan 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 CAVA Group, with a short position of ARCA Japan. Check out your portfolio center. Please also check ongoing floating volatility patterns of CAVA Group, and ARCA Japan.
Diversification Opportunities for CAVA Group, and ARCA Japan
0.5 | Correlation Coefficient |
Very weak diversification
The 3 months correlation between CAVA and ARCA is 0.5. Overlapping area represents the amount of risk that can be diversified away by holding CAVA Group, and ARCA Japan in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on ARCA Japan and CAVA Group, 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 CAVA Group, are associated (or correlated) with ARCA Japan. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of ARCA Japan has no effect on the direction of CAVA Group, i.e., CAVA Group, and ARCA Japan go up and down completely randomly.
Pair Corralation between CAVA Group, and ARCA Japan
Given the investment horizon of 90 days CAVA Group, is expected to generate 3.1 times more return on investment than ARCA Japan. However, CAVA Group, is 3.1 times more volatile than ARCA Japan. It trades about 0.14 of its potential returns per unit of risk. ARCA Japan is currently generating about 0.07 per unit of risk. If you would invest 13,212 in CAVA Group, on September 5, 2024 and sell it today you would earn a total of 972.00 from holding CAVA Group, or generate 7.36% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Weak |
| Accuracy | 68.18% |
| Values | Daily Returns |
CAVA Group, vs. ARCA Japan
Performance |
| Timeline |
CAVA Group, and ARCA Japan Volatility Contrast
Predicted Return Density |
| Returns |
CAVA Group,
Pair trading matchups for CAVA Group,
ARCA Japan
Pair trading matchups for ARCA Japan
Pair Trading with CAVA Group, and ARCA Japan
The main advantage of trading using opposite CAVA Group, and ARCA Japan positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if CAVA Group, position performs unexpectedly, ARCA Japan 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 ARCA Japan will offset losses from the drop in ARCA Japan's long position.| CAVA Group, vs. Weyco Group | CAVA Group, vs. Cardinal Health | CAVA Group, vs. MagnaChip Semiconductor | CAVA Group, vs. Kulicke and Soffa |
| ARCA Japan vs. Allegheny Technologies Incorporated | ARCA Japan vs. Titan International | ARCA Japan vs. Siriuspoint | ARCA Japan vs. LithiumBank Resources Corp |
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 Portfolio File Import module to quickly import all of your third-party portfolios from your local drive in csv format.
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