Correlation Between Clairvest and ADF
Can any of the company-specific risk be diversified away by investing in both Clairvest and ADF 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 Clairvest and ADF into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Clairvest Group and ADF Group, you can compare the effects of market volatilities on Clairvest and ADF 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 Clairvest with a short position of ADF. Check out your portfolio center. Please also check ongoing floating volatility patterns of Clairvest and ADF.
Diversification Opportunities for Clairvest and ADF
Very weak diversification
The 3 months correlation between Clairvest and ADF is 0.44. Overlapping area represents the amount of risk that can be diversified away by holding Clairvest Group and ADF Group in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on ADF Group and Clairvest 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 Clairvest Group are associated (or correlated) with ADF. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of ADF Group has no effect on the direction of Clairvest i.e., Clairvest and ADF go up and down completely randomly.
Pair Corralation between Clairvest and ADF
Assuming the 90 days trading horizon Clairvest Group is expected to generate 0.22 times more return on investment than ADF. However, Clairvest Group is 4.54 times less risky than ADF. It trades about 0.15 of its potential returns per unit of risk. ADF Group is currently generating about -0.14 per unit of risk. If you would invest 6,950 in Clairvest Group on September 3, 2024 and sell it today you would earn a total of 151.00 from holding Clairvest Group or generate 2.17% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
Clairvest Group vs. ADF Group
Performance |
| Timeline |
| Clairvest Group |
| ADF Group |
Clairvest and ADF Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Clairvest and ADF
The main advantage of trading using opposite Clairvest and ADF positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Clairvest position performs unexpectedly, ADF 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 ADF will offset losses from the drop in ADF's long position.| 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 Backtesting module to avoid under-diversification and over-optimization by backtesting your portfolios.
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