Correlation Between CBOE Crude and EnVVeno Medical

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

By analyzing existing cross correlation between CBOE Crude Oil and enVVeno Medical Corp, you can compare the effects of market volatilities on CBOE Crude and EnVVeno Medical 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 CBOE Crude with a short position of EnVVeno Medical. Check out your portfolio center. Please also check ongoing floating volatility patterns of CBOE Crude and EnVVeno Medical.

Diversification Opportunities for CBOE Crude and EnVVeno Medical

-0.08

Correlation Coefficient

CBOE Crude  EnVVeno Medical

Good diversification

The 3 months correlation between CBOE and EnVVeno is -0.08. Overlapping area represents the amount of risk that can be diversified away by holding CBOE Crude Oil and enVVeno Medical Corp in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on enVVeno Medical Corp and CBOE Crude 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 CBOE Crude Oil are associated (or correlated) with EnVVeno Medical. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of enVVeno Medical Corp has no effect on the direction of CBOE Crude i.e., CBOE Crude and EnVVeno Medical go up and down completely randomly.

Pair Corralation between CBOE Crude and EnVVeno Medical

Assuming the 90 days trading horizon CBOE Crude Oil is expected to generate 1.56 times more return on investment than EnVVeno Medical. However, CBOE Crude is 1.56 times more volatile than enVVeno Medical Corp. It trades about 0.02 of its potential returns per unit of risk. enVVeno Medical Corp is currently generating about -0.17 per unit of risk. If you would invest  3,439  in CBOE Crude Oil on September 21, 2024 and sell it today you would lose (179.00) from holding CBOE Crude Oil or give up 5.21% of portfolio value over 90 days.

Time Period	3 Months [change]
Direction	Moves Against
Strength	Insignificant
Accuracy	98.44%
Values	Daily Returns

CBOE Crude Oil  vs.  enVVeno Medical Corp

Pair Trading with CBOE Crude and EnVVeno Medical

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

The idea behind CBOE Crude Oil and enVVeno Medical Corp 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 Price Exposure Probability module to analyze equity upside and downside potential for a given time horizon across multiple markets.