Correlation Between CVW CleanTech and Laurentian Bank
Can any of the company-specific risk be diversified away by investing in both CVW CleanTech and Laurentian Bank 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 Laurentian Bank into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between CVW CleanTech and Laurentian Bank, you can compare the effects of market volatilities on CVW CleanTech and Laurentian Bank 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 Laurentian Bank. Check out your portfolio center. Please also check ongoing floating volatility patterns of CVW CleanTech and Laurentian Bank.
Diversification Opportunities for CVW CleanTech and Laurentian Bank
0.14 | Correlation Coefficient |
Average diversification
The 3 months correlation between CVW and Laurentian is 0.14. Overlapping area represents the amount of risk that can be diversified away by holding CVW CleanTech and Laurentian Bank in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Laurentian Bank 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 Laurentian Bank. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Laurentian Bank has no effect on the direction of CVW CleanTech i.e., CVW CleanTech and Laurentian Bank go up and down completely randomly.
Pair Corralation between CVW CleanTech and Laurentian Bank
Assuming the 90 days horizon CVW CleanTech is expected to generate 2.39 times more return on investment than Laurentian Bank. However, CVW CleanTech is 2.39 times more volatile than Laurentian Bank. It trades about 0.01 of its potential returns per unit of risk. Laurentian Bank is currently generating about 0.01 per unit of risk. If you would invest 117.00 in CVW CleanTech on September 4, 2024 and sell it today you would lose (28.00) from holding CVW CleanTech or give up 23.93% of portfolio value over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Insignificant |
| Accuracy | 100.0% |
| Values | Daily Returns |
CVW CleanTech vs. Laurentian Bank
Performance |
| Timeline |
| CVW CleanTech |
| Laurentian Bank |
CVW CleanTech and Laurentian Bank Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with CVW CleanTech and Laurentian Bank
The main advantage of trading using opposite CVW CleanTech and Laurentian Bank positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if CVW CleanTech position performs unexpectedly, Laurentian Bank 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 Laurentian Bank will offset losses from the drop in Laurentian Bank's long position.The idea behind CVW CleanTech and Laurentian Bank 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.| Laurentian Bank vs. Canadian Western Bank | Laurentian Bank vs. National Bank of | Laurentian Bank vs. Canadian Imperial Bank | Laurentian Bank vs. Great West Lifeco |
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 Technical Analysis module to check basic technical indicators and analysis based on most latest market data.
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