Correlation Between ADF and Clairvest

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

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

Diversification Opportunities for ADF and Clairvest

0.62

Correlation Coefficient

ADF  Clairvest

Poor diversification

The 3 months correlation between ADF and Clairvest is 0.62. Overlapping area represents the amount of risk that can be diversified away by holding ADF Group and Clairvest Group in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Clairvest Group and ADF 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 ADF Group are associated (or correlated) with Clairvest. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Clairvest Group has no effect on the direction of ADF i.e., ADF and Clairvest go up and down completely randomly.

Pair Corralation between ADF and Clairvest

Assuming the 90 days trading horizon ADF Group is expected to generate 3.42 times more return on investment than Clairvest. However, ADF is 3.42 times more volatile than Clairvest Group. It trades about 0.1 of its potential returns per unit of risk. Clairvest Group is currently generating about 0.19 per unit of risk. If you would invest  615.00  in ADF Group on April 22, 2025 and sell it today you would earn a total of  164.00  from holding ADF Group or generate 26.67% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Together
Strength	Significant
Accuracy	98.44%
Values	Daily Returns

ADF Group  vs.  Clairvest Group

ADF Group

Risk-Adjusted Performance

OK

Compared to the overall equity markets, risk-adjusted returns on investments in ADF Group are ranked lower than 8 (%) of all global equities and portfolios over the last 90 days. In spite of very unfluctuating basic indicators, ADF displayed solid returns over the last few months and may actually be approaching a breakup point.

Clairvest Group

Risk-Adjusted Performance

Good

Compared to the overall equity markets, risk-adjusted returns on investments in Clairvest Group are ranked lower than 14 (%) of all global equities and portfolios over the last 90 days. In spite of very unfluctuating technical and fundamental indicators, Clairvest displayed solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with ADF and Clairvest

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

The idea behind ADF Group and Clairvest Group 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 Portfolio Suggestion module to get suggestions outside of your existing asset allocation including your own model portfolios.