Correlation Between Definitive and Caldera

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

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

Diversification Opportunities for Definitive and Caldera

0.08

Correlation Coefficient

Definitive  Caldera

Significant diversification

The 3 months correlation between Definitive and Caldera is 0.08. Overlapping area represents the amount of risk that can be diversified away by holding Definitive and Caldera in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Caldera and Definitive 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 Definitive are associated (or correlated) with Caldera. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Caldera has no effect on the direction of Definitive i.e., Definitive and Caldera go up and down completely randomly.

Pair Corralation between Definitive and Caldera

Assuming the 90 days trading horizon Definitive is expected to generate 1.96 times more return on investment than Caldera. However, Definitive is 1.96 times more volatile than Caldera. It trades about 0.13 of its potential returns per unit of risk. Caldera is currently generating about -0.29 per unit of risk. If you would invest  14.00  in Definitive on July 26, 2025 and sell it today you would earn a total of  10.00  from holding Definitive or generate 71.43% return on investment over 90 days.

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

Definitive  vs.  Caldera

Definitive

Risk-Adjusted Performance

Fair

Compared to the overall equity markets, risk-adjusted returns on investments in Definitive are ranked lower than 9 (%) of all global equities and portfolios over the last 90 days. In spite of rather unsteady fundamental indicators, Definitive exhibited solid returns over the last few months and may actually be approaching a breakup point.

Caldera

Risk-Adjusted Performance

Weakest

Over the last 90 days Caldera has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of unsteady performance in the last few months, the Crypto's basic indicators remain rather sound which may send shares a bit higher in November 2025. The latest tumult may also be a sign of longer-term up-swing for Caldera shareholders.

Pair Trading with Definitive and Caldera

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

The idea behind Definitive and Caldera 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 Sync Your Broker module to sync your existing holdings, watchlists, positions or portfolios from thousands of online brokerage services, banks, investment account aggregators and robo-advisors..