Correlation Between Spring Valley and CNB
Can any of the company-specific risk be diversified away by investing in both Spring Valley and CNB 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 Spring Valley and CNB into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Spring Valley Acquisition and CNB Corporation, you can compare the effects of market volatilities on Spring Valley and CNB 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 Spring Valley with a short position of CNB. Check out your portfolio center. Please also check ongoing floating volatility patterns of Spring Valley and CNB.
Diversification Opportunities for Spring Valley and CNB
0.14 | Correlation Coefficient |
Average diversification
The 3 months correlation between Spring and CNB is 0.14. Overlapping area represents the amount of risk that can be diversified away by holding Spring Valley Acquisition and CNB Corp. in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on CNB Corporation and Spring Valley 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 Spring Valley Acquisition are associated (or correlated) with CNB. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of CNB Corporation has no effect on the direction of Spring Valley i.e., Spring Valley and CNB go up and down completely randomly.
Pair Corralation between Spring Valley and CNB
Given the investment horizon of 90 days Spring Valley is expected to generate 2.31 times less return on investment than CNB. But when comparing it to its historical volatility, Spring Valley Acquisition is 17.27 times less risky than CNB. It trades about 0.09 of its potential returns per unit of risk. CNB Corporation is currently generating about 0.01 of returns per unit of risk over similar time horizon. If you would invest 2,000 in CNB Corporation on September 13, 2024 and sell it today you would lose (250.00) from holding CNB Corporation or give up 12.5% of portfolio value over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Insignificant |
| Accuracy | 76.92% |
| Values | Daily Returns |
Spring Valley Acquisition vs. CNB Corp.
Performance |
| Timeline |
| Spring Valley Acquisition |
| CNB Corporation |
Spring Valley and CNB Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Spring Valley and CNB
The main advantage of trading using opposite Spring Valley and CNB positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Spring Valley position performs unexpectedly, CNB 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 CNB will offset losses from the drop in CNB's long position.The idea behind Spring Valley Acquisition and CNB Corporation 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.| CNB vs. PT Bank Rakyat | CNB vs. Morningstar Unconstrained Allocation | CNB vs. Bondbloxx ETF Trust | CNB vs. Spring Valley Acquisition |
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 Crypto Correlations module to use cryptocurrency correlation module to diversify your cryptocurrency portfolio across multiple coins.
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