Correlation Between CVW CleanTech and GE Vernova

Can any of the company-specific risk be diversified away by investing in both CVW CleanTech and GE Vernova 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 GE Vernova into the same portfolio, which is an essential part of the fundamental portfolio management process.

By analyzing existing cross correlation between CVW CleanTech and GE Vernova LLC, you can compare the effects of market volatilities on CVW CleanTech and GE Vernova 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 GE Vernova. Check out your portfolio center. Please also check ongoing floating volatility patterns of CVW CleanTech and GE Vernova.

Diversification Opportunities for CVW CleanTech and GE Vernova

-0.29

Correlation Coefficient

CVW CleanTech  GE Vernova

Very good diversification

The 3 months correlation between CVW and GEV is -0.29. Overlapping area represents the amount of risk that can be diversified away by holding CVW CleanTech and GE Vernova LLC in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on GE Vernova LLC 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 are associated (or correlated) with GE Vernova. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of GE Vernova LLC has no effect on the direction of CVW CleanTech i.e., CVW CleanTech and GE Vernova go up and down completely randomly.

Pair Corralation between CVW CleanTech and GE Vernova

Assuming the 90 days horizon CVW CleanTech is expected to generate 2.34 times less return on investment than GE Vernova. In addition to that, CVW CleanTech is 2.86 times more volatile than GE Vernova LLC. It trades about 0.03 of its total potential returns per unit of risk. GE Vernova LLC is currently generating about 0.19 per unit of volatility. If you would invest  13,125  in GE Vernova LLC on September 5, 2024 and sell it today you would earn a total of  20,067  from holding GE Vernova LLC or generate 152.89% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Against
Strength	Insignificant
Accuracy	35.43%
Values	Daily Returns

CVW CleanTech  vs.  GE Vernova LLC

CVW CleanTech

Risk-Adjusted Performance

0 of 100

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 recent stock price disturbance, may contribute to mid-run losses for the stockholders.

GE Vernova LLC

Risk-Adjusted Performance

26 of 100

Strong

Compared to the overall equity markets, risk-adjusted returns on investments in GE Vernova LLC are ranked lower than 26 (%) of all global equities and portfolios over the last 90 days. In spite of fairly weak technical and fundamental indicators, GE Vernova showed solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with CVW CleanTech and GE Vernova

The main advantage of trading using opposite CVW CleanTech and GE Vernova positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if CVW CleanTech position performs unexpectedly, GE Vernova 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 GE Vernova will offset losses from the drop in GE Vernova's long position.

The idea behind CVW CleanTech and GE Vernova LLC 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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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 Optimization module to compute new portfolio that will generate highest expected return given your specified tolerance for risk.