Correlation Between CVW CleanTech and Air Canada
Can any of the company-specific risk be diversified away by investing in both CVW CleanTech and Air Canada 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 CVW CleanTech and Air Canada into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between CVW CleanTech and Air Canada, you can compare the effects of market volatilities on CVW CleanTech and Air Canada 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 CVW CleanTech with a short position of Air Canada. Check out your portfolio center. Please also check ongoing floating volatility patterns of CVW CleanTech and Air Canada.
Diversification Opportunities for CVW CleanTech and Air Canada
0.68 | Correlation Coefficient |
Poor diversification
The 3 months correlation between CVW and Air is 0.68. Overlapping area represents the amount of risk that can be diversified away by holding CVW CleanTech and Air Canada in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Air Canada and CVW CleanTech 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 CVW CleanTech are associated (or correlated) with Air Canada. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Air Canada has no effect on the direction of CVW CleanTech i.e., CVW CleanTech and Air Canada go up and down completely randomly.
Pair Corralation between CVW CleanTech and Air Canada
Assuming the 90 days horizon CVW CleanTech is expected to generate 0.94 times more return on investment than Air Canada. However, CVW CleanTech is 1.07 times less risky than Air Canada. It trades about -0.08 of its potential returns per unit of risk. Air Canada is currently generating about -0.39 per unit of risk. If you would invest 84.00 in CVW CleanTech on November 27, 2024 and sell it today you would lose (3.00) from holding CVW CleanTech or give up 3.57% of portfolio value over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Significant |
| Accuracy | 100.0% |
| Values | Daily Returns |
CVW CleanTech vs. Air Canada
Performance |
| Timeline |
| CVW CleanTech |
| Air Canada |
CVW CleanTech and Air Canada Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with CVW CleanTech and Air Canada
The main advantage of trading using opposite CVW CleanTech and Air Canada positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if CVW CleanTech position performs unexpectedly, Air Canada 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 Air Canada will offset losses from the drop in Air Canada's long position.The idea behind CVW CleanTech and Air Canada pairs trading is to make the combined position market-neutral, meaning the overall market's direction will not affect its win or loss (or potential downside or upside). This can be achieved by designing a pairs trade with two highly correlated stocks or equities that operate in a similar space or sector, making it possible to obtain profits through simple and relatively low-risk investment.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 Instant Ratings module to determine any equity ratings based on digital recommendations. Macroaxis instant equity ratings are based on combination of fundamental analysis and risk-adjusted market performance.
Other Complementary Tools
| Portfolio Holdings Check your current holdings and cash postion to detemine if your portfolio needs rebalancing | |
| Stock Screener Find equities using a custom stock filter or screen asymmetry in trading patterns, price, volume, or investment outlook. | |
| Pattern Recognition Use different Pattern Recognition models to time the market across multiple global exchanges | |
| Cryptocurrency Center Build and monitor diversified portfolio of extremely risky digital assets and cryptocurrency | |
| Money Flow Index Determine momentum by analyzing Money Flow Index and other technical indicators |