Correlation Between CVW CleanTech and Air Transport
Can any of the company-specific risk be diversified away by investing in both CVW CleanTech and Air Transport 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 Transport 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 Transport Services, you can compare the effects of market volatilities on CVW CleanTech and Air Transport 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 Transport. Check out your portfolio center. Please also check ongoing floating volatility patterns of CVW CleanTech and Air Transport.
Diversification Opportunities for CVW CleanTech and Air Transport
-0.32 | Correlation Coefficient |
Very good diversification
The 3 months correlation between CVW and Air is -0.32. Overlapping area represents the amount of risk that can be diversified away by holding CVW CleanTech and Air Transport Services in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Air Transport Services 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 Transport. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Air Transport Services has no effect on the direction of CVW CleanTech i.e., CVW CleanTech and Air Transport go up and down completely randomly.
Pair Corralation between CVW CleanTech and Air Transport
Assuming the 90 days horizon CVW CleanTech is expected to generate 2.65 times more return on investment than Air Transport. However, CVW CleanTech is 2.65 times more volatile than Air Transport Services. It trades about 0.03 of its potential returns per unit of risk. Air Transport Services is currently generating about 0.0 per unit of risk. If you would invest 85.00 in CVW CleanTech on September 3, 2024 and sell it today you would lose (24.00) from holding CVW CleanTech or give up 28.24% 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. Air Transport Services
Performance |
| Timeline |
| CVW CleanTech |
| Air Transport Services |
CVW CleanTech and Air Transport Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with CVW CleanTech and Air Transport
The main advantage of trading using opposite CVW CleanTech and Air Transport positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if CVW CleanTech position performs unexpectedly, Air Transport 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 Transport will offset losses from the drop in Air Transport's long position.| CVW CleanTech vs. Perseus Mining Limited | CVW CleanTech vs. Summa Silver Corp | CVW CleanTech vs. Mangazeya Mining | CVW CleanTech vs. Boston Beer |
| Air Transport vs. Copa Holdings SA | Air Transport vs. SkyWest | Air Transport vs. Sun Country Airlines | Air Transport vs. Frontier Group Holdings |
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 Portfolio Rebalancing module to analyze risk-adjusted returns against different time horizons to find asset-allocation targets.
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