Correlation Between Power Financial and CVW CleanTech
Can any of the company-specific risk be diversified away by investing in both Power Financial 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 Power Financial and CVW CleanTech into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Power Financial Corp and CVW CleanTech, you can compare the effects of market volatilities on Power Financial 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 Power Financial with a short position of CVW CleanTech. Check out your portfolio center. Please also check ongoing floating volatility patterns of Power Financial and CVW CleanTech.
Diversification Opportunities for Power Financial and CVW CleanTech
0.1 | Correlation Coefficient |
Average diversification
The 3 months correlation between Power and CVW is 0.1. Overlapping area represents the amount of risk that can be diversified away by holding Power Financial Corp and CVW CleanTech in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on CVW CleanTech and Power Financial 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 Power Financial Corp 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 Power Financial i.e., Power Financial and CVW CleanTech go up and down completely randomly.
Pair Corralation between Power Financial and CVW CleanTech
Assuming the 90 days trading horizon Power Financial Corp is expected to generate 0.45 times more return on investment than CVW CleanTech. However, Power Financial Corp is 2.22 times less risky than CVW CleanTech. It trades about 0.16 of its potential returns per unit of risk. CVW CleanTech is currently generating about 0.02 per unit of risk. If you would invest 1,621 in Power Financial Corp on October 25, 2024 and sell it today you would earn a total of 84.00 from holding Power Financial Corp or generate 5.18% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Insignificant |
| Accuracy | 100.0% |
| Values | Daily Returns |
Power Financial Corp vs. CVW CleanTech
Performance |
| Timeline |
| Power Financial Corp |
| CVW CleanTech |
Power Financial and CVW CleanTech Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Power Financial and CVW CleanTech
The main advantage of trading using opposite Power Financial and CVW CleanTech positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Power Financial 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.| Power Financial vs. CVW CleanTech | Power Financial vs. XXIX Metal Corp | Power Financial vs. Evertz Technologies Limited | Power Financial vs. Birchtech 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 Headlines Timeline module to stay connected to all market stories and filter out noise. Drill down to analyze hype elasticity.
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