Correlation Between FactSet Research and CVW CleanTech

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

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

Diversification Opportunities for FactSet Research and CVW CleanTech

0.26

Correlation Coefficient

FactSet Research  CVW CleanTech

Modest diversification

The 3 months correlation between FactSet and CVW is 0.26. Overlapping area represents the amount of risk that can be diversified away by holding FactSet Research Systems and CVW CleanTech in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on CVW CleanTech and FactSet Research 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 FactSet Research Systems 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 FactSet Research i.e., FactSet Research and CVW CleanTech go up and down completely randomly.

Pair Corralation between FactSet Research and CVW CleanTech

Considering the 90-day investment horizon FactSet Research is expected to generate 8.19 times less return on investment than CVW CleanTech. But when comparing it to its historical volatility, FactSet Research Systems is 15.32 times less risky than CVW CleanTech. It trades about 0.15 of its potential returns per unit of risk. CVW CleanTech is currently generating about 0.08 of returns per unit of risk over similar time horizon. If you would invest  27.00  in CVW CleanTech on February 13, 2024 and sell it today you would earn a total of  0.00  from holding CVW CleanTech or generate 0.0% return on investment over 90 days.

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

FactSet Research Systems  vs.  CVW CleanTech

FactSet Research Systems

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days FactSet Research Systems has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of comparatively stable fundamental indicators, FactSet Research is not utilizing all of its potentials. The current stock price uproar, may contribute to short-horizon losses for the private 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. Despite uncertain performance in the last few months, the Stock's technical and fundamental indicators remain nearly stable which may send shares a bit higher in June 2024. The current disturbance may also be a sign of long-run up-swing for the company stockholders.

Pair Trading with FactSet Research and CVW CleanTech

The main advantage of trading using opposite FactSet Research and CVW CleanTech positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if FactSet Research 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 FactSet Research Systems 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 Stock Screener module to find equities using a custom stock filter or screen asymmetry in trading patterns, price, volume, or investment outlook..