Correlation Between Grande Portage and CVW CleanTech

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

By analyzing existing cross correlation between Grande Portage Resources and CVW CleanTech, you can compare the effects of market volatilities on Grande Portage 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 Grande Portage with a short position of CVW CleanTech. Check out your portfolio center. Please also check ongoing floating volatility patterns of Grande Portage and CVW CleanTech.

Diversification Opportunities for Grande Portage and CVW CleanTech

-0.41

Correlation Coefficient

Grande Portage  CVW CleanTech

Very good diversification

The 3 months correlation between Grande and CVW is -0.41. Overlapping area represents the amount of risk that can be diversified away by holding Grande Portage Resources and CVW CleanTech in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on CVW CleanTech and Grande Portage 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 Grande Portage Resources 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 Grande Portage i.e., Grande Portage and CVW CleanTech go up and down completely randomly.

Pair Corralation between Grande Portage and CVW CleanTech

Assuming the 90 days horizon Grande Portage Resources is expected to under-perform the CVW CleanTech. In addition to that, Grande Portage is 2.27 times more volatile than CVW CleanTech. It trades about -0.14 of its total potential returns per unit of risk. CVW CleanTech is currently generating about -0.02 per unit of volatility. If you would invest  86.00  in CVW CleanTech on September 26, 2024 and sell it today you would lose (1.00) from holding CVW CleanTech or give up 1.16% of portfolio value over 90 days.

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

Grande Portage Resources  vs.  CVW CleanTech

Grande Portage Resources

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Grande Portage Resources has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of abnormal performance in the last few months, the Stock's basic indicators remain fairly stable which may send shares a bit higher in January 2025. The latest fuss may also be a sign of long-term up-swing for the venture sophisticated investors.

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. In spite of fairly stable basic indicators, CVW CleanTech is not utilizing all of its potentials. The latest stock price fuss, may contribute to near-short-term losses for the sophisticated investors.

Pair Trading with Grande Portage and CVW CleanTech

The main advantage of trading using opposite Grande Portage and CVW CleanTech positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Grande Portage 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.

The idea behind Grande Portage Resources 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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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 Investing Opportunities module to build portfolios using our predefined set of ideas and optimize them against your investing preferences.