Correlation Between CVW CleanTech and Alaska Energy
Can any of the company-specific risk be diversified away by investing in both CVW CleanTech and Alaska Energy 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 Alaska Energy into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between CVW CleanTech and Alaska Energy Metals, you can compare the effects of market volatilities on CVW CleanTech and Alaska Energy 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 Alaska Energy. Check out your portfolio center. Please also check ongoing floating volatility patterns of CVW CleanTech and Alaska Energy.
Diversification Opportunities for CVW CleanTech and Alaska Energy
-0.27 | Correlation Coefficient |
Very good diversification
The 3 months correlation between CVW and Alaska is -0.27. Overlapping area represents the amount of risk that can be diversified away by holding CVW CleanTech and Alaska Energy Metals in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Alaska Energy Metals 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 Alaska Energy. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Alaska Energy Metals has no effect on the direction of CVW CleanTech i.e., CVW CleanTech and Alaska Energy go up and down completely randomly.
Pair Corralation between CVW CleanTech and Alaska Energy
Assuming the 90 days horizon CVW CleanTech is expected to generate 1.24 times less return on investment than Alaska Energy. But when comparing it to its historical volatility, CVW CleanTech is 1.75 times less risky than Alaska Energy. It trades about 0.02 of its potential returns per unit of risk. Alaska Energy Metals is currently generating about 0.01 of returns per unit of risk over similar time horizon. If you would invest 40.00 in Alaska Energy Metals on October 28, 2024 and sell it today you would lose (24.00) from holding Alaska Energy Metals or give up 60.0% of portfolio value over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Insignificant |
| Accuracy | 100.0% |
| Values | Daily Returns |
CVW CleanTech vs. Alaska Energy Metals
Performance |
| Timeline |
| CVW CleanTech |
| Alaska Energy Metals |
CVW CleanTech and Alaska Energy Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with CVW CleanTech and Alaska Energy
The main advantage of trading using opposite CVW CleanTech and Alaska Energy positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if CVW CleanTech position performs unexpectedly, Alaska Energy 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 Alaska Energy will offset losses from the drop in Alaska Energy's long position.The idea behind CVW CleanTech and Alaska Energy Metals 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.| Alaska Energy vs. Data Communications Management | Alaska Energy vs. Maple Peak Investments | Alaska Energy vs. Brookfield Investments | Alaska Energy vs. CVW CleanTech |
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 Funds Screener module to find actively-traded funds from around the world traded on over 30 global exchanges.
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