Correlation Between CVW CleanTech and HARRIS

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Can any of the company-specific risk be diversified away by investing in both CVW CleanTech and HARRIS 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 HARRIS into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between CVW CleanTech and HARRIS P DEL, you can compare the effects of market volatilities on CVW CleanTech and HARRIS 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 HARRIS. Check out your portfolio center. Please also check ongoing floating volatility patterns of CVW CleanTech and HARRIS.

Diversification Opportunities for CVW CleanTech and HARRIS

0.4
  Correlation Coefficient

Very weak diversification

The 3 months correlation between CVW and HARRIS is 0.4. Overlapping area represents the amount of risk that can be diversified away by holding CVW CleanTech and HARRIS P DEL in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on HARRIS P DEL 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 HARRIS. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of HARRIS P DEL has no effect on the direction of CVW CleanTech i.e., CVW CleanTech and HARRIS go up and down completely randomly.

Pair Corralation between CVW CleanTech and HARRIS

Assuming the 90 days horizon CVW CleanTech is expected to generate 5.18 times more return on investment than HARRIS. However, CVW CleanTech is 5.18 times more volatile than HARRIS P DEL. It trades about 0.04 of its potential returns per unit of risk. HARRIS P DEL is currently generating about 0.0 per unit of risk. If you would invest  56.00  in CVW CleanTech on September 1, 2024 and sell it today you would earn a total of  5.00  from holding CVW CleanTech or generate 8.93% return on investment over 90 days.
Time Period3 Months [change]
DirectionMoves Together 
StrengthWeak
Accuracy93.65%
ValuesDaily Returns

CVW CleanTech  vs.  HARRIS P DEL

 Performance 
       Timeline  
CVW CleanTech 

Risk-Adjusted Performance

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Weak
 
Strong
Very Weak
Over the last 90 days CVW CleanTech has generated negative risk-adjusted returns adding no value to investors with long positions. Despite nearly stable technical and fundamental indicators, CVW CleanTech is not utilizing all of its potentials. The current stock price disturbance, may contribute to mid-run losses for the stockholders.
HARRIS P DEL 

Risk-Adjusted Performance

0 of 100

 
Weak
 
Strong
Very Weak
Over the last 90 days HARRIS P DEL has generated negative risk-adjusted returns adding no value to investors with long positions. Despite somewhat strong basic indicators, HARRIS is not utilizing all of its potentials. The newest stock price disturbance, may contribute to short-term losses for the investors.

CVW CleanTech and HARRIS Volatility Contrast

   Predicted Return Density   
       Returns  

Pair Trading with CVW CleanTech and HARRIS

The main advantage of trading using opposite CVW CleanTech and HARRIS positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if CVW CleanTech position performs unexpectedly, HARRIS 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 HARRIS will offset losses from the drop in HARRIS's long position.
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The idea behind CVW CleanTech and HARRIS P DEL 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.
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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 Volatility module to check portfolio volatility and analyze historical return density to properly model market risk.

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