Correlation Between CVW CLEANTECH and Cass Information

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

By analyzing existing cross correlation between CVW CLEANTECH INC and Cass Information Systems, you can compare the effects of market volatilities on CVW CLEANTECH and Cass Information 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 Cass Information. Check out your portfolio center. Please also check ongoing floating volatility patterns of CVW CLEANTECH and Cass Information.

Diversification Opportunities for CVW CLEANTECH and Cass Information

0.58

Correlation Coefficient

CVW CLEANTECH  Cass Information

Very weak diversification

The 3 months correlation between CVW and Cass is 0.58. Overlapping area represents the amount of risk that can be diversified away by holding CVW CLEANTECH INC and Cass Information Systems in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Cass Information Systems 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 INC are associated (or correlated) with Cass Information. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Cass Information Systems has no effect on the direction of CVW CLEANTECH i.e., CVW CLEANTECH and Cass Information go up and down completely randomly.

Pair Corralation between CVW CLEANTECH and Cass Information

Assuming the 90 days trading horizon CVW CLEANTECH is expected to generate 1.2 times less return on investment than Cass Information. In addition to that, CVW CLEANTECH is 1.2 times more volatile than Cass Information Systems. It trades about 0.07 of its total potential returns per unit of risk. Cass Information Systems is currently generating about 0.09 per unit of volatility. If you would invest  3,653  in Cass Information Systems on September 28, 2024 and sell it today you would earn a total of  367.00  from holding Cass Information Systems or generate 10.05% return on investment over 90 days.

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

CVW CLEANTECH INC  vs.  Cass Information Systems

CVW CLEANTECH INC

Risk-Adjusted Performance

5 of 100

Weak

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

Cass Information Systems

Risk-Adjusted Performance

7 of 100

OK

Compared to the overall equity markets, risk-adjusted returns on investments in Cass Information Systems are ranked lower than 7 (%) of all global equities and portfolios over the last 90 days. Despite nearly fragile basic indicators, Cass Information may actually be approaching a critical reversion point that can send shares even higher in January 2025.

Pair Trading with CVW CLEANTECH and Cass Information

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

The idea behind CVW CLEANTECH INC and Cass Information Systems 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 Pair Correlation module to compare performance and examine fundamental relationship between any two equity instruments.