Correlation Between CarsalesCom and CVB Financial

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

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

Diversification Opportunities for CarsalesCom and CVB Financial

0.62

Correlation Coefficient

CarsalesCom  CVB Financial

Poor diversification

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

Pair Corralation between CarsalesCom and CVB Financial

Assuming the 90 days horizon CarsalesCom is expected to generate 1.03 times less return on investment than CVB Financial. In addition to that, CarsalesCom is 1.06 times more volatile than CVB Financial Corp. It trades about 0.12 of its total potential returns per unit of risk. CVB Financial Corp is currently generating about 0.14 per unit of volatility. If you would invest  1,574  in CVB Financial Corp on April 23, 2025 and sell it today you would earn a total of  206.00  from holding CVB Financial Corp or generate 13.09% return on investment over 90 days.

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

CarsalesCom  vs.  CVB Financial Corp

CarsalesCom

Risk-Adjusted Performance

Good

Compared to the overall equity markets, risk-adjusted returns on investments in CarsalesCom are ranked lower than 9 (%) of all global equities and portfolios over the last 90 days. Despite nearly fragile basic indicators, CarsalesCom reported solid returns over the last few months and may actually be approaching a breakup point.

CVB Financial Corp

Risk-Adjusted Performance

OK

Compared to the overall equity markets, risk-adjusted returns on investments in CVB Financial Corp are ranked lower than 10 (%) of all global equities and portfolios over the last 90 days. Despite nearly uncertain basic indicators, CVB Financial reported solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with CarsalesCom and CVB Financial

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

The idea behind CarsalesCom and CVB Financial Corp 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 Risk-Return Analysis module to view associations between returns expected from investment and the risk you assume.