Correlation Between Eddy Smart and CVW CleanTech
Can any of the company-specific risk be diversified away by investing in both Eddy Smart and CVW CleanTech 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 Eddy Smart and CVW CleanTech into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Eddy Smart Home and CVW CleanTech, you can compare the effects of market volatilities on Eddy Smart and CVW CleanTech 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 Eddy Smart with a short position of CVW CleanTech. Check out your portfolio center. Please also check ongoing floating volatility patterns of Eddy Smart and CVW CleanTech.
Diversification Opportunities for Eddy Smart and CVW CleanTech
-0.36 | Correlation Coefficient |
Very good diversification
The 3 months correlation between Eddy and CVW is -0.36. Overlapping area represents the amount of risk that can be diversified away by holding Eddy Smart Home and CVW CleanTech in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on CVW CleanTech and Eddy Smart 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 Eddy Smart Home are associated (or correlated) with CVW CleanTech. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of CVW CleanTech has no effect on the direction of Eddy Smart i.e., Eddy Smart and CVW CleanTech go up and down completely randomly.
Pair Corralation between Eddy Smart and CVW CleanTech
Assuming the 90 days horizon Eddy Smart Home is expected to generate 3.64 times more return on investment than CVW CleanTech. However, Eddy Smart is 3.64 times more volatile than CVW CleanTech. It trades about 0.05 of its potential returns per unit of risk. CVW CleanTech is currently generating about 0.01 per unit of risk. If you would invest 1,000.00 in Eddy Smart Home on September 14, 2024 and sell it today you would lose (775.00) from holding Eddy Smart Home or give up 77.5% of portfolio value over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Insignificant |
| Accuracy | 100.0% |
| Values | Daily Returns |
Eddy Smart Home vs. CVW CleanTech
Performance |
| Timeline |
| Eddy Smart Home |
| CVW CleanTech |
Eddy Smart and CVW CleanTech Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Eddy Smart and CVW CleanTech
The main advantage of trading using opposite Eddy Smart and CVW CleanTech positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Eddy Smart position performs unexpectedly, CVW CleanTech 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 CVW CleanTech will offset losses from the drop in CVW CleanTech's long position.| Eddy Smart vs. Simply Better Brands | Eddy Smart vs. Forward Water Technologies | Eddy Smart vs. Pulse Oil Corp | Eddy Smart vs. C3 Metals |
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 Idea Analyzer module to analyze all characteristics, volatility and risk-adjusted return of Macroaxis ideas.
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