Correlation Between Cathedral Energy and Avalon Advanced

Specify exactly 2 symbols:
Can any of the company-specific risk be diversified away by investing in both Cathedral Energy and Avalon Advanced 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 Cathedral Energy and Avalon Advanced into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Cathedral Energy Services and Avalon Advanced Materials, you can compare the effects of market volatilities on Cathedral Energy and Avalon Advanced 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 Cathedral Energy with a short position of Avalon Advanced. Check out your portfolio center. Please also check ongoing floating volatility patterns of Cathedral Energy and Avalon Advanced.

Diversification Opportunities for Cathedral Energy and Avalon Advanced

  Correlation Coefficient

Excellent diversification

The 3 months correlation between Cathedral and Avalon is -0.64. Overlapping area represents the amount of risk that can be diversified away by holding Cathedral Energy Services and Avalon Advanced Materials in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Avalon Advanced Materials and Cathedral Energy 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 Cathedral Energy Services are associated (or correlated) with Avalon Advanced. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Avalon Advanced Materials has no effect on the direction of Cathedral Energy i.e., Cathedral Energy and Avalon Advanced go up and down completely randomly.

Pair Corralation between Cathedral Energy and Avalon Advanced

Assuming the 90 days trading horizon Cathedral Energy Services is expected to generate 0.29 times more return on investment than Avalon Advanced. However, Cathedral Energy Services is 3.47 times less risky than Avalon Advanced. It trades about 0.07 of its potential returns per unit of risk. Avalon Advanced Materials is currently generating about -0.07 per unit of risk. If you would invest  87.00  in Cathedral Energy Services on January 17, 2024 and sell it today you would earn a total of  2.00  from holding Cathedral Energy Services or generate 2.3% return on investment over 90 days.
Time Period3 Months [change]
DirectionMoves Against 
ValuesDaily Returns

Cathedral Energy Services  vs.  Avalon Advanced Materials

Cathedral Energy Services 

Risk-Adjusted Performance

10 of 100

Compared to the overall equity markets, risk-adjusted returns on investments in Cathedral Energy Services are ranked lower than 10 (%) of all global equities and portfolios over the last 90 days. In spite of very unfluctuating basic indicators, Cathedral Energy displayed solid returns over the last few months and may actually be approaching a breakup point.
Avalon Advanced Materials 

Risk-Adjusted Performance

0 of 100

Very Weak
Over the last 90 days Avalon Advanced Materials has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of abnormal performance in the last few months, the Stock's essential indicators remain very healthy which may send shares a bit higher in May 2024. The recent disarray may also be a sign of long period up-swing for the firm investors.

Cathedral Energy and Avalon Advanced Volatility Contrast

   Predicted Return Density   

Pair Trading with Cathedral Energy and Avalon Advanced

The main advantage of trading using opposite Cathedral Energy and Avalon Advanced positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Cathedral Energy position performs unexpectedly, Avalon Advanced 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 Avalon Advanced will offset losses from the drop in Avalon Advanced's long position.
The idea behind Cathedral Energy Services and Avalon Advanced Materials 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.
Check out your portfolio center.
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 Rebalancing module to analyze risk-adjusted returns against different time horizons to find asset-allocation targets.

Other Complementary Tools

AI Portfolio Architect
Use AI to generate optimal portfolios and find profitable investment opportunities
Price Ceiling Movement
Calculate and plot Price Ceiling Movement for different equity instruments
Equity Analysis
Research over 250,000 global equities including funds, stocks and ETFs to find investment opportunities
Correlation Analysis
Reduce portfolio risk simply by holding instruments which are not perfectly correlated
Portfolio Dashboard
Portfolio dashboard that provides centralized access to all your investments
Theme Ratings
Determine theme ratings based on digital equity recommendations. Macroaxis theme ratings are based on combination of fundamental analysis and risk-adjusted market performance
Performance Analysis
Check effects of mean-variance optimization against your current asset allocation
Bond Analysis
Evaluate and analyze corporate bonds as a potential investment for your portfolios.
Fundamental Analysis
View fundamental data based on most recent published financial statements
Cryptocurrency Center
Build and monitor diversified portfolio of extremely risky digital assets and cryptocurrency
Options Analysis
Analyze and evaluate options and option chains as a potential hedge for your portfolios
ETF Categories
List of ETF categories grouped based on various criteria, such as the investment strategy or type of investments