Correlation Between CVW CLEANTECH and NVR

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

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

Diversification Opportunities for CVW CLEANTECH and NVR

0.4

Correlation Coefficient

CVW CLEANTECH  NVR

Very weak diversification

The 3 months correlation between CVW and NVR is 0.4. Overlapping area represents the amount of risk that can be diversified away by holding CVW CLEANTECH INC and NVR Inc in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on NVR Inc and CVW CLEANTECH 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 CVW CLEANTECH INC are associated (or correlated) with NVR. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of NVR Inc has no effect on the direction of CVW CLEANTECH i.e., CVW CLEANTECH and NVR go up and down completely randomly.

Pair Corralation between CVW CLEANTECH and NVR

Assuming the 90 days trading horizon CVW CLEANTECH INC is expected to generate 2.17 times more return on investment than NVR. However, CVW CLEANTECH is 2.17 times more volatile than NVR Inc. It trades about 0.1 of its potential returns per unit of risk. NVR Inc is currently generating about 0.04 per unit of risk. If you would invest  53.00  in CVW CLEANTECH INC on April 22, 2025 and sell it today you would earn a total of  11.00  from holding CVW CLEANTECH INC or generate 20.75% return on investment over 90 days.

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

CVW CLEANTECH INC  vs.  NVR Inc

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 uncertain fundamental indicators, CVW CLEANTECH reported solid returns over the last few months and may actually be approaching a breakup point.

NVR Inc

Risk-Adjusted Performance

Insignificant

Compared to the overall equity markets, risk-adjusted returns on investments in NVR Inc are ranked lower than 3 (%) of all global equities and portfolios over the last 90 days. Despite nearly stable basic indicators, NVR is not utilizing all of its potentials. The newest stock price disturbance, may contribute to mid-run losses for the stockholders.

Pair Trading with CVW CLEANTECH and NVR

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

The idea behind CVW CLEANTECH INC and NVR 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 Competition Analyzer module to analyze and compare many basic indicators for a group of related or unrelated entities.