Correlation Between Descartes Systems and Clearwater Analytics

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

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

Diversification Opportunities for Descartes Systems and Clearwater Analytics

0.29

Correlation Coefficient

Descartes Systems  Clearwater Analytics

Modest diversification

The 3 months correlation between Descartes and Clearwater is 0.29. Overlapping area represents the amount of risk that can be diversified away by holding Descartes Systems Group and Clearwater Analytics Holdings in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Clearwater Analytics and Descartes Systems 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 Descartes Systems Group are associated (or correlated) with Clearwater Analytics. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Clearwater Analytics has no effect on the direction of Descartes Systems i.e., Descartes Systems and Clearwater Analytics go up and down completely randomly.

Pair Corralation between Descartes Systems and Clearwater Analytics

Given the investment horizon of 90 days Descartes Systems Group is expected to generate 1.12 times more return on investment than Clearwater Analytics. However, Descartes Systems is 1.12 times more volatile than Clearwater Analytics Holdings. It trades about 0.0 of its potential returns per unit of risk. Clearwater Analytics Holdings is currently generating about -0.08 per unit of risk. If you would invest  10,746  in Descartes Systems Group on May 7, 2025 and sell it today you would lose (100.00) from holding Descartes Systems Group or give up 0.93% of portfolio value over 90 days.

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

Descartes Systems Group  vs.  Clearwater Analytics Holdings

Descartes Systems

Risk-Adjusted Performance

Very Weak

Over the last 90 days Descartes Systems Group has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of fairly strong technical and fundamental indicators, Descartes Systems is not utilizing all of its potentials. The latest stock price disturbance, may contribute to short-term losses for the investors.

Clearwater Analytics

Risk-Adjusted Performance

Very Weak

Over the last 90 days Clearwater Analytics Holdings has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of latest inconsistent performance, the Stock's basic indicators remain healthy and the recent disarray on Wall Street may also be a sign of long period gains for the firm investors.

Pair Trading with Descartes Systems and Clearwater Analytics

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

The idea behind Descartes Systems Group and Clearwater Analytics Holdings 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 Idea Analyzer module to analyze all characteristics, volatility and risk-adjusted return of Macroaxis ideas.