Correlation Between Clarke and Clairvest
Can any of the company-specific risk be diversified away by investing in both Clarke and Clairvest 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 Clarke and Clairvest into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Clarke Inc and Clairvest Group, you can compare the effects of market volatilities on Clarke and Clairvest 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 Clarke with a short position of Clairvest. Check out your portfolio center. Please also check ongoing floating volatility patterns of Clarke and Clairvest.
Diversification Opportunities for Clarke and Clairvest
Modest diversification
The 3 months correlation between Clarke and Clairvest is 0.21. Overlapping area represents the amount of risk that can be diversified away by holding Clarke Inc and Clairvest Group in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Clairvest Group and Clarke 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 Clarke Inc are associated (or correlated) with Clairvest. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Clairvest Group has no effect on the direction of Clarke i.e., Clarke and Clairvest go up and down completely randomly.
Pair Corralation between Clarke and Clairvest
Assuming the 90 days trading horizon Clarke Inc is expected to generate 1.51 times more return on investment than Clairvest. However, Clarke is 1.51 times more volatile than Clairvest Group. It trades about 0.08 of its potential returns per unit of risk. Clairvest Group is currently generating about 0.01 per unit of risk. If you would invest 1,300 in Clarke Inc on August 29, 2024 and sell it today you would earn a total of 1,080 from holding Clarke Inc or generate 83.08% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Very Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
Clarke Inc vs. Clairvest Group
Performance |
| Timeline |
| Clarke Inc |
| Clairvest Group |
Clarke and Clairvest Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Clarke and Clairvest
The main advantage of trading using opposite Clarke and Clairvest positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Clarke position performs unexpectedly, Clairvest 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 Clairvest will offset losses from the drop in Clairvest's long position.| Clarke vs. Terravest Capital | Clarke vs. Clairvest Group | Clarke vs. Algoma Central | Clarke vs. Accord Financial Corp |
| Clairvest vs. Clarke Inc | Clairvest vs. Guardian Capital Group | Clairvest vs. Accord Financial Corp | Clairvest vs. E L Financial 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 Optimization module to compute new portfolio that will generate highest expected return given your specified tolerance for risk.
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