Correlation Between CVC Brasil and NatWest Group

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

By analyzing existing cross correlation between CVC Brasil Operadora and NatWest Group plc, you can compare the effects of market volatilities on CVC Brasil and NatWest Group 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 CVC Brasil with a short position of NatWest Group. Check out your portfolio center. Please also check ongoing floating volatility patterns of CVC Brasil and NatWest Group.

Diversification Opportunities for CVC Brasil and NatWest Group

0.33

Correlation Coefficient

CVC Brasil  NatWest Group

Weak diversification

The 3 months correlation between CVC and NatWest is 0.33. Overlapping area represents the amount of risk that can be diversified away by holding CVC Brasil Operadora and NatWest Group plc in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on NatWest Group plc and CVC Brasil 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 CVC Brasil Operadora are associated (or correlated) with NatWest Group. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of NatWest Group plc has no effect on the direction of CVC Brasil i.e., CVC Brasil and NatWest Group go up and down completely randomly.

Pair Corralation between CVC Brasil and NatWest Group

Assuming the 90 days trading horizon CVC Brasil is expected to generate 1.16 times less return on investment than NatWest Group. In addition to that, CVC Brasil is 2.4 times more volatile than NatWest Group plc. It trades about 0.01 of its total potential returns per unit of risk. NatWest Group plc is currently generating about 0.04 per unit of volatility. If you would invest  7,325  in NatWest Group plc on April 23, 2025 and sell it today you would earn a total of  207.00  from holding NatWest Group plc or generate 2.83% return on investment over 90 days.

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

CVC Brasil Operadora  vs.  NatWest Group plc

CVC Brasil Operadora

Risk-Adjusted Performance

Weak

Compared to the overall equity markets, risk-adjusted returns on investments in CVC Brasil Operadora are ranked lower than 1 (%) of all global equities and portfolios over the last 90 days. In spite of comparatively stable basic indicators, CVC Brasil is not utilizing all of its potentials. The newest stock price uproar, may contribute to short-horizon losses for the private investors.

NatWest Group plc

Risk-Adjusted Performance

Insignificant

Compared to the overall equity markets, risk-adjusted returns on investments in NatWest Group plc are ranked lower than 2 (%) of all global equities and portfolios over the last 90 days. Despite somewhat strong basic indicators, NatWest Group is not utilizing all of its potentials. The current stock price disturbance, may contribute to short-term losses for the investors.

Pair Trading with CVC Brasil and NatWest Group

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

The idea behind CVC Brasil Operadora and NatWest Group plc 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 Aroon Oscillator module to analyze current equity momentum using Aroon Oscillator and other momentum ratios.