Correlation Between CLO and PIVX

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

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

Diversification Opportunities for CLO and PIVX

-0.54

Correlation Coefficient

CLO  PIVX

Excellent diversification

The 3 months correlation between CLO and PIVX is -0.54. Overlapping area represents the amount of risk that can be diversified away by holding CLO and PIVX in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on PIVX and CLO 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 CLO are associated (or correlated) with PIVX. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of PIVX has no effect on the direction of CLO i.e., CLO and PIVX go up and down completely randomly.

Pair Corralation between CLO and PIVX

Assuming the 90 days trading horizon CLO is expected to under-perform the PIVX. In addition to that, CLO is 1.81 times more volatile than PIVX. It trades about -0.12 of its total potential returns per unit of risk. PIVX is currently generating about -0.1 per unit of volatility. If you would invest  46.00  in PIVX on January 25, 2024 and sell it today you would lose (7.00) from holding PIVX or give up 15.22% of portfolio value over 90 days.

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

CLO  vs.  PIVX

CLO

Risk-Adjusted Performance

8 of 100

OK

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

PIVX

Risk-Adjusted Performance

8 of 100

OK

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

Pair Trading with CLO and PIVX

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

The idea behind CLO and PIVX 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 Fundamentals Comparison module to compare fundamentals across multiple equities to find investing opportunities.