Correlation Between CAPP and PIVX

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

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

Diversification Opportunities for CAPP and PIVX

0.78

Correlation Coefficient

CAPP  PIVX

Poor diversification

The 3 months correlation between CAPP and PIVX is 0.78. Overlapping area represents the amount of risk that can be diversified away by holding CAPP and PIVX in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on PIVX and CAPP 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 CAPP 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 CAPP i.e., CAPP and PIVX go up and down completely randomly.

Pair Corralation between CAPP and PIVX

Assuming the 90 days trading horizon CAPP is expected to generate 0.6 times more return on investment than PIVX. However, CAPP is 1.67 times less risky than PIVX. It trades about -0.03 of its potential returns per unit of risk. PIVX is currently generating about -0.13 per unit of risk. If you would invest  0.01  in CAPP on January 22, 2025 and sell it today you would lose  0.00  from holding CAPP or give up 8.06% of portfolio value over 90 days.

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

CAPP  vs.  PIVX

CAPP

Risk-Adjusted Performance

Very Weak

Over the last 90 days CAPP has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of rather sound fundamental indicators, CAPP is not utilizing all of its potentials. The latest stock price tumult, may contribute to shorter-term losses for the shareholders.

PIVX

Risk-Adjusted Performance

Very Weak

Over the last 90 days PIVX 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 fundamental indicators remain rather sound which may send shares a bit higher in May 2025. The latest tumult may also be a sign of longer-term up-swing for PIVX shareholders.

Pair Trading with CAPP and PIVX

The main advantage of trading using opposite CAPP and PIVX positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if CAPP 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 CAPP 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.

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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 Global Correlations module to find global opportunities by holding instruments from different markets.