Correlation Between NORDHEALTH and Clean Energy
Can any of the company-specific risk be diversified away by investing in both NORDHEALTH 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 NORDHEALTH and Clean Energy into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between NORDHEALTH AS NK and Clean Energy Fuels, you can compare the effects of market volatilities on NORDHEALTH 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 NORDHEALTH with a short position of Clean Energy. Check out your portfolio center. Please also check ongoing floating volatility patterns of NORDHEALTH and Clean Energy.
Diversification Opportunities for NORDHEALTH and Clean Energy
-0.02 | Correlation Coefficient |
Good diversification
The 3 months correlation between NORDHEALTH and Clean is -0.02. Overlapping area represents the amount of risk that can be diversified away by holding NORDHEALTH AS NK 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 NORDHEALTH 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 NORDHEALTH AS NK 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 NORDHEALTH i.e., NORDHEALTH and Clean Energy go up and down completely randomly.
Pair Corralation between NORDHEALTH and Clean Energy
Assuming the 90 days horizon NORDHEALTH AS NK is expected to generate 1.18 times more return on investment than Clean Energy. However, NORDHEALTH is 1.18 times more volatile than Clean Energy Fuels. It trades about 0.14 of its potential returns per unit of risk. Clean Energy Fuels is currently generating about -0.05 per unit of risk. If you would invest 270.00 in NORDHEALTH AS NK on August 28, 2024 and sell it today you would earn a total of 37.00 from holding NORDHEALTH AS NK or generate 13.7% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Insignificant |
| Accuracy | 100.0% |
| Values | Daily Returns |
NORDHEALTH AS NK vs. Clean Energy Fuels
Performance |
| Timeline |
| NORDHEALTH AS NK |
| Clean Energy Fuels |
NORDHEALTH and Clean Energy Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with NORDHEALTH and Clean Energy
The main advantage of trading using opposite NORDHEALTH and Clean Energy positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if NORDHEALTH 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.The idea behind NORDHEALTH AS NK and Clean Energy Fuels 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.| Clean Energy vs. Coor Service Management | Clean Energy vs. The Trade Desk | Clean Energy vs. Platinum Investment Management | Clean Energy vs. Fast Retailing Co |
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 Analyzer module to portfolio analysis module that provides access to portfolio diagnostics and optimization engine.
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