Correlation Between HARRIS and CVW CleanTech

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Can any of the company-specific risk be diversified away by investing in both HARRIS 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 HARRIS and CVW CleanTech into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between HARRIS P DEL and CVW CleanTech, you can compare the effects of market volatilities on HARRIS 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 HARRIS with a short position of CVW CleanTech. Check out your portfolio center. Please also check ongoing floating volatility patterns of HARRIS and CVW CleanTech.

Diversification Opportunities for HARRIS and CVW CleanTech

0.4
  Correlation Coefficient

Very weak diversification

The 3 months correlation between HARRIS and CVW is 0.4. Overlapping area represents the amount of risk that can be diversified away by holding HARRIS P DEL and CVW CleanTech in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on CVW CleanTech and HARRIS 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 HARRIS P DEL 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 HARRIS i.e., HARRIS and CVW CleanTech go up and down completely randomly.

Pair Corralation between HARRIS and CVW CleanTech

Assuming the 90 days trading horizon HARRIS P DEL is expected to under-perform the CVW CleanTech. In addition to that, HARRIS is 1.06 times more volatile than CVW CleanTech. It trades about -0.13 of its total potential returns per unit of risk. CVW CleanTech is currently generating about 0.18 per unit of volatility. If you would invest  59.00  in CVW CleanTech on September 1, 2024 and sell it today you would earn a total of  2.00  from holding CVW CleanTech or generate 3.39% return on investment over 90 days.
Time Period3 Months [change]
DirectionMoves Together 
StrengthWeak
Accuracy85.71%
ValuesDaily Returns

HARRIS P DEL  vs.  CVW CleanTech

 Performance 
       Timeline  
HARRIS P DEL 

Risk-Adjusted Performance

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Weak
 
Strong
Very Weak
Over the last 90 days HARRIS P DEL has generated negative risk-adjusted returns adding no value to investors with long positions. Despite somewhat strong basic indicators, HARRIS is not utilizing all of its potentials. The newest stock price disturbance, may contribute to short-term losses for the investors.
CVW CleanTech 

Risk-Adjusted Performance

0 of 100

 
Weak
 
Strong
Very Weak
Over the last 90 days CVW CleanTech has generated negative risk-adjusted returns adding no value to investors with long positions. Despite nearly stable technical and fundamental indicators, CVW CleanTech is not utilizing all of its potentials. The current stock price disturbance, may contribute to mid-run losses for the stockholders.

HARRIS and CVW CleanTech Volatility Contrast

   Predicted Return Density   
       Returns  

Pair Trading with HARRIS and CVW CleanTech

The main advantage of trading using opposite HARRIS and CVW CleanTech positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if HARRIS 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.
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The idea behind HARRIS P DEL and CVW CleanTech 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.
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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 Fundamentals Comparison module to compare fundamentals across multiple equities to find investing opportunities.

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