Correlation Between CVW CleanTech and NextSource Materials
Can any of the company-specific risk be diversified away by investing in both CVW CleanTech and NextSource Materials 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 NextSource Materials into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between CVW CleanTech and NextSource Materials, you can compare the effects of market volatilities on CVW CleanTech and NextSource Materials 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 NextSource Materials. Check out your portfolio center. Please also check ongoing floating volatility patterns of CVW CleanTech and NextSource Materials.
Diversification Opportunities for CVW CleanTech and NextSource Materials
0.38 | Correlation Coefficient |
Weak diversification
The 3 months correlation between CVW and NextSource is 0.38. Overlapping area represents the amount of risk that can be diversified away by holding CVW CleanTech and NextSource Materials in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on NextSource Materials 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 NextSource Materials. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of NextSource Materials has no effect on the direction of CVW CleanTech i.e., CVW CleanTech and NextSource Materials go up and down completely randomly.
Pair Corralation between CVW CleanTech and NextSource Materials
Assuming the 90 days horizon CVW CleanTech is expected to generate 0.73 times more return on investment than NextSource Materials. However, CVW CleanTech is 1.38 times less risky than NextSource Materials. It trades about 0.06 of its potential returns per unit of risk. NextSource Materials is currently generating about -0.28 per unit of risk. If you would invest 85.00 in CVW CleanTech on August 28, 2024 and sell it today you would earn a total of 2.00 from holding CVW CleanTech or generate 2.35% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Very Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
CVW CleanTech vs. NextSource Materials
Performance |
| Timeline |
| CVW CleanTech |
| NextSource Materials |
CVW CleanTech and NextSource Materials Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with CVW CleanTech and NextSource Materials
The main advantage of trading using opposite CVW CleanTech and NextSource Materials positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if CVW CleanTech position performs unexpectedly, NextSource Materials 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 NextSource Materials will offset losses from the drop in NextSource Materials' long position.| CVW CleanTech vs. First Majestic Silver | CVW CleanTech vs. Ivanhoe Energy | CVW CleanTech vs. Orezone Gold Corp | CVW CleanTech vs. Faraday Copper Corp |
| NextSource Materials vs. First Majestic Silver | NextSource Materials vs. Ivanhoe Energy | NextSource Materials vs. Orezone Gold Corp | NextSource Materials vs. Faraday Copper 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 Crypto Correlations module to use cryptocurrency correlation module to diversify your cryptocurrency portfolio across multiple coins.
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