Correlation Between Cadiz Depositary and Crown LNG
Can any of the company-specific risk be diversified away by investing in both Cadiz Depositary and Crown LNG 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 Cadiz Depositary and Crown LNG into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Cadiz Depositary Shares and Crown LNG Holdings, you can compare the effects of market volatilities on Cadiz Depositary and Crown LNG 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 Cadiz Depositary with a short position of Crown LNG. Check out your portfolio center. Please also check ongoing floating volatility patterns of Cadiz Depositary and Crown LNG.
Diversification Opportunities for Cadiz Depositary and Crown LNG
0.64 | Correlation Coefficient |
Poor diversification
The 3 months correlation between Cadiz and Crown is 0.64. Overlapping area represents the amount of risk that can be diversified away by holding Cadiz Depositary Shares and Crown LNG Holdings in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Crown LNG Holdings and Cadiz Depositary 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 Cadiz Depositary Shares are associated (or correlated) with Crown LNG. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Crown LNG Holdings has no effect on the direction of Cadiz Depositary i.e., Cadiz Depositary and Crown LNG go up and down completely randomly.
Pair Corralation between Cadiz Depositary and Crown LNG
Assuming the 90 days horizon Cadiz Depositary is expected to generate 11.66 times less return on investment than Crown LNG. But when comparing it to its historical volatility, Cadiz Depositary Shares is 25.78 times less risky than Crown LNG. It trades about 0.33 of its potential returns per unit of risk. Crown LNG Holdings is currently generating about 0.15 of returns per unit of risk over similar time horizon. If you would invest 2.40 in Crown LNG Holdings on August 24, 2024 and sell it today you would earn a total of 0.61 from holding Crown LNG Holdings or generate 25.42% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Significant |
| Accuracy | 100.0% |
| Values | Daily Returns |
Cadiz Depositary Shares vs. Crown LNG Holdings
Performance |
| Timeline |
| Cadiz Depositary Shares |
| Crown LNG Holdings |
Cadiz Depositary and Crown LNG Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Cadiz Depositary and Crown LNG
The main advantage of trading using opposite Cadiz Depositary and Crown LNG positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Cadiz Depositary position performs unexpectedly, Crown LNG 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 Crown LNG will offset losses from the drop in Crown LNG's long position.| Cadiz Depositary vs. Atlanticus Holdings Corp | Cadiz Depositary vs. LifeMD Preferred Series | Cadiz Depositary vs. Aquagold International | Cadiz Depositary vs. Morningstar Unconstrained Allocation |
| Crown LNG vs. Eni SpA ADR | Crown LNG vs. BP PLC ADR | Crown LNG vs. Ecopetrol SA ADR | Crown LNG vs. Suncor Energy |
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 Theme Ratings module to determine theme ratings based on digital equity recommendations. Macroaxis theme ratings are based on combination of fundamental analysis and risk-adjusted market performance.
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