Correlation Between Clearfield and BOS Better

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

By analyzing existing cross correlation between Clearfield and BOS Better Online, you can compare the effects of market volatilities on Clearfield and BOS Better 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 Clearfield with a short position of BOS Better. Check out your portfolio center. Please also check ongoing floating volatility patterns of Clearfield and BOS Better.

Diversification Opportunities for Clearfield and BOS Better

0.09

Correlation Coefficient

Clearfield  BOS Better

Significant diversification

The 3 months correlation between Clearfield and BOS is 0.09. Overlapping area represents the amount of risk that can be diversified away by holding Clearfield and BOS Better Online in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on BOS Better Online and Clearfield 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 Clearfield are associated (or correlated) with BOS Better. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of BOS Better Online has no effect on the direction of Clearfield i.e., Clearfield and BOS Better go up and down completely randomly.

Pair Corralation between Clearfield and BOS Better

Given the investment horizon of 90 days Clearfield is expected to generate 1.21 times more return on investment than BOS Better. However, Clearfield is 1.21 times more volatile than BOS Better Online. It trades about 0.24 of its potential returns per unit of risk. BOS Better Online is currently generating about 0.13 per unit of risk. If you would invest  3,499  in Clearfield on March 5, 2024 and sell it today you would earn a total of  327.00  from holding Clearfield or generate 9.35% return on investment over 90 days.

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

Clearfield  vs.  BOS Better Online

Clearfield

Risk-Adjusted Performance

13 of 100

Good

Compared to the overall equity markets, risk-adjusted returns on investments in Clearfield are ranked lower than 13 (%) of all global equities and portfolios over the last 90 days. In spite of rather uncertain technical and fundamental indicators, Clearfield exhibited solid returns over the last few months and may actually be approaching a breakup point.

BOS Better Online

Risk-Adjusted Performance

4 of 100

Insignificant

Compared to the overall equity markets, risk-adjusted returns on investments in BOS Better Online are ranked lower than 4 (%) of all global equities and portfolios over the last 90 days. In spite of rather uncertain basic indicators, BOS Better may actually be approaching a critical reversion point that can send shares even higher in July 2024.

Pair Trading with Clearfield and BOS Better

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

The idea behind Clearfield and BOS Better Online 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 Idea Breakdown module to analyze constituents of all Macroaxis ideas. Macroaxis investment ideas are predefined, sector-focused investing themes.