Correlation Between CVW CleanTech and Summit Materials
Can any of the company-specific risk be diversified away by investing in both CVW CleanTech and Summit 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 Summit 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 Summit Materials, you can compare the effects of market volatilities on CVW CleanTech and Summit 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 Summit Materials. Check out your portfolio center. Please also check ongoing floating volatility patterns of CVW CleanTech and Summit Materials.
Diversification Opportunities for CVW CleanTech and Summit Materials
-0.41 | Correlation Coefficient |
Very good diversification
The 3 months correlation between CVW and Summit is -0.41. Overlapping area represents the amount of risk that can be diversified away by holding CVW CleanTech and Summit Materials in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Summit 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 Summit Materials. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Summit Materials has no effect on the direction of CVW CleanTech i.e., CVW CleanTech and Summit Materials go up and down completely randomly.
Pair Corralation between CVW CleanTech and Summit Materials
Assuming the 90 days horizon CVW CleanTech is expected to under-perform the Summit Materials. In addition to that, CVW CleanTech is 1.31 times more volatile than Summit Materials. It trades about -0.03 of its total potential returns per unit of risk. Summit Materials is currently generating about 0.17 per unit of volatility. If you would invest 4,051 in Summit Materials on August 24, 2024 and sell it today you would earn a total of 1,065 from holding Summit Materials or generate 26.29% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Very Weak |
| Accuracy | 98.44% |
| Values | Daily Returns |
CVW CleanTech vs. Summit Materials
Performance |
| Timeline |
| CVW CleanTech |
| Summit Materials |
CVW CleanTech and Summit Materials Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with CVW CleanTech and Summit Materials
The main advantage of trading using opposite CVW CleanTech and Summit Materials positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if CVW CleanTech position performs unexpectedly, Summit 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 Summit Materials will offset losses from the drop in Summit Materials' long position.| CVW CleanTech vs. Ryanair Holdings PLC | CVW CleanTech vs. Grupo Aeroportuario del | CVW CleanTech vs. Evertz Technologies Limited | CVW CleanTech vs. Marti Technologies |
| Summit Materials vs. Martin Marietta Materials | Summit Materials vs. Vulcan Materials | Summit Materials vs. United States Lime | Summit Materials vs. James Hardie Industries |
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 Cryptocurrency Center module to build and monitor diversified portfolio of extremely risky digital assets and cryptocurrency.
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