Correlation Between Northstar Clean and CVW CleanTech
Can any of the company-specific risk be diversified away by investing in both Northstar Clean 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 Northstar Clean and CVW CleanTech into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Northstar Clean Technologies and CVW CleanTech, you can compare the effects of market volatilities on Northstar Clean 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 Northstar Clean with a short position of CVW CleanTech. Check out your portfolio center. Please also check ongoing floating volatility patterns of Northstar Clean and CVW CleanTech.
Diversification Opportunities for Northstar Clean and CVW CleanTech
-0.16 | Correlation Coefficient |
Good diversification
The 3 months correlation between Northstar and CVW is -0.16. Overlapping area represents the amount of risk that can be diversified away by holding Northstar Clean Technologies and CVW CleanTech in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on CVW CleanTech and Northstar Clean 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 Northstar Clean Technologies 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 Northstar Clean i.e., Northstar Clean and CVW CleanTech go up and down completely randomly.
Pair Corralation between Northstar Clean and CVW CleanTech
Assuming the 90 days trading horizon Northstar Clean Technologies is expected to generate 1.11 times more return on investment than CVW CleanTech. However, Northstar Clean is 1.11 times more volatile than CVW CleanTech. It trades about 0.09 of its potential returns per unit of risk. CVW CleanTech is currently generating about 0.03 per unit of risk. If you would invest 14.00 in Northstar Clean Technologies on August 28, 2024 and sell it today you would earn a total of 14.00 from holding Northstar Clean Technologies or generate 100.0% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Insignificant |
| Accuracy | 100.0% |
| Values | Daily Returns |
Northstar Clean Technologies vs. CVW CleanTech
Performance |
| Timeline |
| Northstar Clean Tech |
| CVW CleanTech |
Northstar Clean and CVW CleanTech Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Northstar Clean and CVW CleanTech
The main advantage of trading using opposite Northstar Clean and CVW CleanTech positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Northstar Clean 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.The idea behind Northstar Clean Technologies and CVW CleanTech 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.| CVW CleanTech vs. First Majestic Silver | CVW CleanTech vs. Ivanhoe Energy | CVW CleanTech vs. Orezone Gold Corp | CVW CleanTech vs. Faraday Copper 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 Idea Analyzer module to analyze all characteristics, volatility and risk-adjusted return of Macroaxis ideas.
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