Correlation Between CVW CleanTech and Major Drilling
Can any of the company-specific risk be diversified away by investing in both CVW CleanTech and Major Drilling 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 Major Drilling into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between CVW CleanTech and Major Drilling Group, you can compare the effects of market volatilities on CVW CleanTech and Major Drilling 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 Major Drilling. Check out your portfolio center. Please also check ongoing floating volatility patterns of CVW CleanTech and Major Drilling.
Diversification Opportunities for CVW CleanTech and Major Drilling
-0.04 | Correlation Coefficient |
Good diversification
The 3 months correlation between CVW and Major is -0.04. Overlapping area represents the amount of risk that can be diversified away by holding CVW CleanTech and Major Drilling Group in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Major Drilling Group 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 Major Drilling. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Major Drilling Group has no effect on the direction of CVW CleanTech i.e., CVW CleanTech and Major Drilling go up and down completely randomly.
Pair Corralation between CVW CleanTech and Major Drilling
Assuming the 90 days horizon CVW CleanTech is expected to generate 2.12 times more return on investment than Major Drilling. However, CVW CleanTech is 2.12 times more volatile than Major Drilling Group. It trades about 0.01 of its potential returns per unit of risk. Major Drilling Group is currently generating about -0.01 per unit of risk. If you would invest 118.00 in CVW CleanTech on September 3, 2024 and sell it today you would lose (31.00) from holding CVW CleanTech or give up 26.27% 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. Major Drilling Group
Performance |
| Timeline |
| CVW CleanTech |
| Major Drilling Group |
CVW CleanTech and Major Drilling Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with CVW CleanTech and Major Drilling
The main advantage of trading using opposite CVW CleanTech and Major Drilling positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if CVW CleanTech position performs unexpectedly, Major Drilling 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 Major Drilling will offset losses from the drop in Major Drilling's long position.The idea behind CVW CleanTech and Major Drilling Group 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.| Major Drilling vs. Algoma Steel Group | Major Drilling vs. Champion Iron | Major Drilling vs. International Zeolite Corp | Major Drilling vs. European Residential Real |
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 FinTech Suite module to use AI to screen and filter profitable investment opportunities.
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