Correlation Between Southwest Gas and CVW CleanTech
Can any of the company-specific risk be diversified away by investing in both Southwest Gas 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 Southwest Gas and CVW CleanTech into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Southwest Gas Holdings and CVW CleanTech, you can compare the effects of market volatilities on Southwest Gas 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 Southwest Gas with a short position of CVW CleanTech. Check out your portfolio center. Please also check ongoing floating volatility patterns of Southwest Gas and CVW CleanTech.
Diversification Opportunities for Southwest Gas and CVW CleanTech
0.02 | Correlation Coefficient |
Significant diversification
The 3 months correlation between Southwest and CVW is 0.02. Overlapping area represents the amount of risk that can be diversified away by holding Southwest Gas Holdings and CVW CleanTech in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on CVW CleanTech and Southwest Gas 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 Southwest Gas Holdings 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 Southwest Gas i.e., Southwest Gas and CVW CleanTech go up and down completely randomly.
Pair Corralation between Southwest Gas and CVW CleanTech
Considering the 90-day investment horizon Southwest Gas is expected to generate 3.66 times less return on investment than CVW CleanTech. But when comparing it to its historical volatility, Southwest Gas Holdings is 5.73 times less risky than CVW CleanTech. It trades about 0.08 of its potential returns per unit of risk. CVW CleanTech is currently generating about 0.05 of returns per unit of risk over similar time horizon. If you would invest 44.00 in CVW CleanTech on September 2, 2024 and sell it today you would earn a total of 17.00 from holding CVW CleanTech or generate 38.64% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Insignificant |
| Accuracy | 100.0% |
| Values | Daily Returns |
Southwest Gas Holdings vs. CVW CleanTech
Performance |
| Timeline |
| Southwest Gas Holdings |
| CVW CleanTech |
Southwest Gas and CVW CleanTech Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Southwest Gas and CVW CleanTech
The main advantage of trading using opposite Southwest Gas and CVW CleanTech positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Southwest Gas 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.| Southwest Gas vs. NewJersey Resources | Southwest Gas vs. Northwest Natural Gas | Southwest Gas vs. NorthWestern | Southwest Gas vs. Chesapeake Utilities |
| CVW CleanTech vs. Highway Holdings Limited | CVW CleanTech vs. Esperion Therapeutics | CVW CleanTech vs. Merit Medical Systems | CVW CleanTech vs. Cementos Pacasmayo SAA |
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 Breakdown module to analyze constituents of all Macroaxis ideas. Macroaxis investment ideas are predefined, sector-focused investing themes.
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