Correlation Between CVW CLEANTECH and Illinois Tool
Can any of the company-specific risk be diversified away by investing in both CVW CLEANTECH and Illinois Tool 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 Illinois Tool 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 Illinois Tool Works, you can compare the effects of market volatilities on CVW CLEANTECH and Illinois Tool 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 Illinois Tool. Check out your portfolio center. Please also check ongoing floating volatility patterns of CVW CLEANTECH and Illinois Tool.
Diversification Opportunities for CVW CLEANTECH and Illinois Tool
0.63 | Correlation Coefficient |
Poor diversification
The 3 months correlation between CVW and Illinois is 0.63. Overlapping area represents the amount of risk that can be diversified away by holding CVW CLEANTECH INC and Illinois Tool Works in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Illinois Tool Works 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 Illinois Tool. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Illinois Tool Works has no effect on the direction of CVW CLEANTECH i.e., CVW CLEANTECH and Illinois Tool go up and down completely randomly.
Pair Corralation between CVW CLEANTECH and Illinois Tool
Assuming the 90 days trading horizon CVW CLEANTECH INC is expected to under-perform the Illinois Tool. In addition to that, CVW CLEANTECH is 2.68 times more volatile than Illinois Tool Works. It trades about -0.02 of its total potential returns per unit of risk. Illinois Tool Works is currently generating about 0.09 per unit of volatility. If you would invest 21,850 in Illinois Tool Works on September 27, 2024 and sell it today you would earn a total of 2,780 from holding Illinois Tool Works or generate 12.72% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Significant |
| Accuracy | 100.0% |
| Values | Daily Returns |
CVW CLEANTECH INC vs. Illinois Tool Works
Performance |
| Timeline |
| CVW CLEANTECH INC |
| Illinois Tool Works |
CVW CLEANTECH and Illinois Tool Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with CVW CLEANTECH and Illinois Tool
The main advantage of trading using opposite CVW CLEANTECH and Illinois Tool positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if CVW CLEANTECH position performs unexpectedly, Illinois Tool 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 Illinois Tool will offset losses from the drop in Illinois Tool's long position.| CVW CLEANTECH vs. Rio Tinto Group | CVW CLEANTECH vs. Anglo American plc | CVW CLEANTECH vs. Liontown Resources Limited | CVW CLEANTECH vs. NEXA RESOURCES SA |
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 Portfolio Suggestion module to get suggestions outside of your existing asset allocation including your own model portfolios.
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