Correlation Between PETCO HEALTH and CVW CLEANTECH

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

By analyzing existing cross correlation between PETCO HEALTH CLA and CVW CLEANTECH INC, you can compare the effects of market volatilities on PETCO HEALTH 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 PETCO HEALTH with a short position of CVW CLEANTECH. Check out your portfolio center. Please also check ongoing floating volatility patterns of PETCO HEALTH and CVW CLEANTECH.

Diversification Opportunities for PETCO HEALTH and CVW CLEANTECH

0.33

Correlation Coefficient

PETCO HEALTH  CVW CLEANTECH

Weak diversification

The 3 months correlation between PETCO and CVW is 0.33. Overlapping area represents the amount of risk that can be diversified away by holding PETCO HEALTH CLA and CVW CLEANTECH INC in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on CVW CLEANTECH INC and PETCO HEALTH 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 PETCO HEALTH CLA 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 INC has no effect on the direction of PETCO HEALTH i.e., PETCO HEALTH and CVW CLEANTECH go up and down completely randomly.

Pair Corralation between PETCO HEALTH and CVW CLEANTECH

Assuming the 90 days horizon PETCO HEALTH is expected to generate 15.47 times less return on investment than CVW CLEANTECH. In addition to that, PETCO HEALTH is 1.26 times more volatile than CVW CLEANTECH INC. It trades about 0.0 of its total potential returns per unit of risk. CVW CLEANTECH INC is currently generating about 0.09 per unit of volatility. If you would invest  53.00  in CVW CLEANTECH INC on April 20, 2025 and sell it today you would earn a total of  10.00  from holding CVW CLEANTECH INC or generate 18.87% return on investment over 90 days.

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

PETCO HEALTH CLA  vs.  CVW CLEANTECH INC

PETCO HEALTH CLA

Risk-Adjusted Performance

Very Weak

Over the last 90 days PETCO HEALTH CLA has generated negative risk-adjusted returns adding no value to investors with long positions. Despite nearly stable basic indicators, PETCO HEALTH is not utilizing all of its potentials. The current stock price disturbance, may contribute to mid-run losses for the stockholders.

CVW CLEANTECH INC

Risk-Adjusted Performance

OK

Compared to the overall equity markets, risk-adjusted returns on investments in CVW CLEANTECH INC are ranked lower than 7 (%) of all global equities and portfolios over the last 90 days. Despite nearly unsteady fundamental indicators, CVW CLEANTECH reported solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with PETCO HEALTH and CVW CLEANTECH

The main advantage of trading using opposite PETCO HEALTH and CVW CLEANTECH positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if PETCO HEALTH 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 PETCO HEALTH CLA and CVW CLEANTECH INC 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 Analyst Advice module to analyst recommendations and target price estimates broken down by several categories.