Correlation Between Tradegate and CVB Financial
Can any of the company-specific risk be diversified away by investing in both Tradegate and CVB Financial 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 Tradegate and CVB Financial into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Tradegate AG Wertpapierhandelsbank and CVB Financial Corp, you can compare the effects of market volatilities on Tradegate and CVB Financial 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 Tradegate with a short position of CVB Financial. Check out your portfolio center. Please also check ongoing floating volatility patterns of Tradegate and CVB Financial.
Diversification Opportunities for Tradegate and CVB Financial
0.42 | Correlation Coefficient |
Very weak diversification
The 3 months correlation between Tradegate and CVB is 0.42. Overlapping area represents the amount of risk that can be diversified away by holding Tradegate AG Wertpapierhandels and CVB Financial Corp in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on CVB Financial Corp and Tradegate 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 Tradegate AG Wertpapierhandelsbank are associated (or correlated) with CVB Financial. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of CVB Financial Corp has no effect on the direction of Tradegate i.e., Tradegate and CVB Financial go up and down completely randomly.
Pair Corralation between Tradegate and CVB Financial
Assuming the 90 days horizon Tradegate AG Wertpapierhandelsbank is expected to under-perform the CVB Financial. But the stock apears to be less risky and, when comparing its historical volatility, Tradegate AG Wertpapierhandelsbank is 1.67 times less risky than CVB Financial. The stock trades about -0.05 of its potential returns per unit of risk. The CVB Financial Corp is currently generating about 0.02 of returns per unit of risk over similar time horizon. If you would invest 1,620 in CVB Financial Corp on December 12, 2024 and sell it today you would earn a total of 130.00 from holding CVB Financial Corp or generate 8.02% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
Tradegate AG Wertpapierhandels vs. CVB Financial Corp
Performance |
| Timeline |
| Tradegate AG Wertpap |
| CVB Financial Corp |
Tradegate and CVB Financial Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Tradegate and CVB Financial
The main advantage of trading using opposite Tradegate and CVB Financial positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Tradegate position performs unexpectedly, CVB Financial 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 CVB Financial will offset losses from the drop in CVB Financial's long position.| Tradegate vs. Wayside Technology Group | ||
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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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