Correlation Between CVW CLEANTECH and Canadian Utilities
Can any of the company-specific risk be diversified away by investing in both CVW CLEANTECH and Canadian Utilities 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 CVW CLEANTECH and Canadian Utilities into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between CVW CLEANTECH INC and Canadian Utilities Limited, you can compare the effects of market volatilities on CVW CLEANTECH and Canadian Utilities 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 CVW CLEANTECH with a short position of Canadian Utilities. Check out your portfolio center. Please also check ongoing floating volatility patterns of CVW CLEANTECH and Canadian Utilities.
Diversification Opportunities for CVW CLEANTECH and Canadian Utilities
0.48 | Correlation Coefficient |
Very weak diversification
The 3 months correlation between CVW and Canadian is 0.48. Overlapping area represents the amount of risk that can be diversified away by holding CVW CLEANTECH INC and Canadian Utilities Limited in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Canadian Utilities and CVW CLEANTECH 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 CVW CLEANTECH INC are associated (or correlated) with Canadian Utilities. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Canadian Utilities has no effect on the direction of CVW CLEANTECH i.e., CVW CLEANTECH and Canadian Utilities go up and down completely randomly.
Pair Corralation between CVW CLEANTECH and Canadian Utilities
Assuming the 90 days trading horizon CVW CLEANTECH INC is expected to under-perform the Canadian Utilities. In addition to that, CVW CLEANTECH is 4.36 times more volatile than Canadian Utilities Limited. It trades about -0.06 of its total potential returns per unit of risk. Canadian Utilities Limited is currently generating about -0.07 per unit of volatility. If you would invest 2,345 in Canadian Utilities Limited on October 15, 2024 and sell it today you would lose (26.00) from holding Canadian Utilities Limited or give up 1.11% of portfolio value over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
CVW CLEANTECH INC vs. Canadian Utilities Limited
Performance |
| Timeline |
| CVW CLEANTECH INC |
| Canadian Utilities |
CVW CLEANTECH and Canadian Utilities Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with CVW CLEANTECH and Canadian Utilities
The main advantage of trading using opposite CVW CLEANTECH and Canadian Utilities positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if CVW CLEANTECH position performs unexpectedly, Canadian Utilities 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 Canadian Utilities will offset losses from the drop in Canadian Utilities' long position.| CVW CLEANTECH vs. SEKISUI CHEMICAL | CVW CLEANTECH vs. Mitsui Chemicals | CVW CLEANTECH vs. Sinopec Shanghai Petrochemical | CVW CLEANTECH vs. Sun Life Financial |
| Canadian Utilities vs. Fuji Media Holdings | Canadian Utilities vs. Hanison Construction Holdings | Canadian Utilities vs. RCS MediaGroup SpA | Canadian Utilities vs. Seven West Media |
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 Commodity Channel module to use Commodity Channel Index to analyze current equity momentum.
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