Correlation Between Superior Plus and Clean Energy
Can any of the company-specific risk be diversified away by investing in both Superior Plus 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 Superior Plus and Clean Energy into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Superior Plus Corp and Clean Energy Fuels, you can compare the effects of market volatilities on Superior Plus 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 Superior Plus with a short position of Clean Energy. Check out your portfolio center. Please also check ongoing floating volatility patterns of Superior Plus and Clean Energy.
Diversification Opportunities for Superior Plus and Clean Energy
0.05 | Correlation Coefficient |
Significant diversification
The 3 months correlation between Superior and Clean is 0.05. Overlapping area represents the amount of risk that can be diversified away by holding Superior Plus Corp 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 Superior Plus 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 Superior Plus Corp 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 Superior Plus i.e., Superior Plus and Clean Energy go up and down completely randomly.
Pair Corralation between Superior Plus and Clean Energy
Assuming the 90 days horizon Superior Plus Corp is expected to generate 0.55 times more return on investment than Clean Energy. However, Superior Plus Corp is 1.81 times less risky than Clean Energy. It trades about -0.02 of its potential returns per unit of risk. Clean Energy Fuels is currently generating about -0.02 per unit of risk. If you would invest 552.00 in Superior Plus Corp on August 28, 2024 and sell it today you would lose (142.00) from holding Superior Plus Corp or give up 25.72% of portfolio value over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Insignificant |
| Accuracy | 99.8% |
| Values | Daily Returns |
Superior Plus Corp vs. Clean Energy Fuels
Performance |
| Timeline |
| Superior Plus Corp |
| Clean Energy Fuels |
Superior Plus and Clean Energy Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Superior Plus and Clean Energy
The main advantage of trading using opposite Superior Plus and Clean Energy positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Superior Plus 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.| Superior Plus vs. Canon Marketing Japan | Superior Plus vs. CANON MARKETING JP | Superior Plus vs. KRISPY KREME DL 01 | Superior Plus vs. SIDETRADE EO 1 |
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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 Competition Analyzer module to analyze and compare many basic indicators for a group of related or unrelated entities.
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