Correlation Between CN MODERN and CLEAN ENERGY
Can any of the company-specific risk be diversified away by investing in both CN MODERN and CLEAN ENERGY 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 CN MODERN and CLEAN ENERGY into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between CN MODERN DAIRY and CLEAN ENERGY FUELS, you can compare the effects of market volatilities on CN MODERN and CLEAN ENERGY 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 CN MODERN with a short position of CLEAN ENERGY. Check out your portfolio center. Please also check ongoing floating volatility patterns of CN MODERN and CLEAN ENERGY.
Diversification Opportunities for CN MODERN and CLEAN ENERGY
-0.22 | Correlation Coefficient |
Very good diversification
The 3 months correlation between 07M and CLEAN is -0.22. Overlapping area represents the amount of risk that can be diversified away by holding CN MODERN DAIRY and CLEAN ENERGY FUELS in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on CLEAN ENERGY FUELS and CN MODERN 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 CN MODERN DAIRY are associated (or correlated) with CLEAN ENERGY. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of CLEAN ENERGY FUELS has no effect on the direction of CN MODERN i.e., CN MODERN and CLEAN ENERGY go up and down completely randomly.
Pair Corralation between CN MODERN and CLEAN ENERGY
Assuming the 90 days trading horizon CN MODERN is expected to generate 2.61 times less return on investment than CLEAN ENERGY. In addition to that, CN MODERN is 1.82 times more volatile than CLEAN ENERGY FUELS. It trades about 0.05 of its total potential returns per unit of risk. CLEAN ENERGY FUELS is currently generating about 0.22 per unit of volatility. If you would invest 259.00 in CLEAN ENERGY FUELS on October 11, 2024 and sell it today you would earn a total of 32.00 from holding CLEAN ENERGY FUELS or generate 12.36% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Insignificant |
| Accuracy | 100.0% |
| Values | Daily Returns |
CN MODERN DAIRY vs. CLEAN ENERGY FUELS
Performance |
| Timeline |
| CN MODERN DAIRY |
| CLEAN ENERGY FUELS |
CN MODERN and CLEAN ENERGY Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with CN MODERN and CLEAN ENERGY
The main advantage of trading using opposite CN MODERN and CLEAN ENERGY positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if CN MODERN position performs unexpectedly, CLEAN ENERGY 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 CLEAN ENERGY will offset losses from the drop in CLEAN ENERGY's long position.| CN MODERN vs. CITY OFFICE REIT | CN MODERN vs. ANTA SPORTS PRODUCT | CN MODERN vs. SPORT LISBOA E | CN MODERN vs. SOEDER SPORTFISKE AB |
| CLEAN ENERGY vs. Reinsurance Group of | CLEAN ENERGY vs. CN MODERN DAIRY | CLEAN ENERGY vs. Direct Line Insurance | CLEAN ENERGY vs. Tyson Foods |
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 Risk-Return Analysis module to view associations between returns expected from investment and the risk you assume.
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