Correlation Between CVW CleanTech and MYR

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

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

Diversification Opportunities for CVW CleanTech and MYR

-0.32

Correlation Coefficient

CVW CleanTech  MYR

Very good diversification

The 3 months correlation between CVW and MYR is -0.32. Overlapping area represents the amount of risk that can be diversified away by holding CVW CleanTech and MYR Group in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on MYR Group 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 MYR. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of MYR Group has no effect on the direction of CVW CleanTech i.e., CVW CleanTech and MYR go up and down completely randomly.

Pair Corralation between CVW CleanTech and MYR

Assuming the 90 days horizon CVW CleanTech is expected to generate 2.89 times more return on investment than MYR. However, CVW CleanTech is 2.89 times more volatile than MYR Group. It trades about 0.05 of its potential returns per unit of risk. MYR Group is currently generating about 0.03 per unit of risk. If you would invest  51.00  in CVW CleanTech on September 13, 2024 and sell it today you would earn a total of  14.00  from holding CVW CleanTech or generate 27.45% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Against
Strength	Insignificant
Accuracy	100.0%
Values	Daily Returns

CVW CleanTech  vs.  MYR Group

CVW CleanTech

Risk-Adjusted Performance

5 of 100

Modest

Compared to the overall equity markets, risk-adjusted returns on investments in CVW CleanTech are ranked lower than 5 (%) of all global equities and portfolios over the last 90 days. Despite nearly weak technical and fundamental indicators, CVW CleanTech may actually be approaching a critical reversion point that can send shares even higher in January 2025.

MYR Group

Risk-Adjusted Performance

24 of 100

Solid

Compared to the overall equity markets, risk-adjusted returns on investments in MYR Group are ranked lower than 24 (%) of all global equities and portfolios over the last 90 days. Despite nearly sluggish basic indicators, MYR reported solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with CVW CleanTech and MYR

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

The idea behind CVW CleanTech and MYR Group 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 Crypto Correlations module to use cryptocurrency correlation module to diversify your cryptocurrency portfolio across multiple coins.