Correlation Between Federal Agricultural and Clean Energy
Can any of the company-specific risk be diversified away by investing in both Federal Agricultural 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 Federal Agricultural and Clean Energy into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Federal Agricultural Mortgage and Clean Energy Fuels, you can compare the effects of market volatilities on Federal Agricultural 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 Federal Agricultural with a short position of Clean Energy. Check out your portfolio center. Please also check ongoing floating volatility patterns of Federal Agricultural and Clean Energy.
Diversification Opportunities for Federal Agricultural and Clean Energy
0.11 | Correlation Coefficient |
Average diversification
The 3 months correlation between Federal and Clean is 0.11. Overlapping area represents the amount of risk that can be diversified away by holding Federal Agricultural Mortgage 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 Federal Agricultural 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 Federal Agricultural Mortgage 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 Federal Agricultural i.e., Federal Agricultural and Clean Energy go up and down completely randomly.
Pair Corralation between Federal Agricultural and Clean Energy
Assuming the 90 days horizon Federal Agricultural Mortgage is expected to under-perform the Clean Energy. But the stock apears to be less risky and, when comparing its historical volatility, Federal Agricultural Mortgage is 2.8 times less risky than Clean Energy. The stock trades about -0.04 of its potential returns per unit of risk. The Clean Energy Fuels is currently generating about 0.28 of returns per unit of risk over similar time horizon. If you would invest 247.00 in Clean Energy Fuels on October 29, 2024 and sell it today you would earn a total of 51.00 from holding Clean Energy Fuels or generate 20.65% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Insignificant |
| Accuracy | 95.0% |
| Values | Daily Returns |
Federal Agricultural Mortgage vs. Clean Energy Fuels
Performance |
| Timeline |
| Federal Agricultural |
| Clean Energy Fuels |
Federal Agricultural and Clean Energy Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Federal Agricultural and Clean Energy
The main advantage of trading using opposite Federal Agricultural and Clean Energy positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Federal Agricultural 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.| Federal Agricultural vs. Live Nation Entertainment | Federal Agricultural vs. MEDCAW INVESTMENTS LS 01 | Federal Agricultural vs. Flutter Entertainment PLC | Federal Agricultural vs. PENN Entertainment |
| Clean Energy vs. MOLSON RS BEVERAGE | Clean Energy vs. National Beverage Corp | Clean Energy vs. ScanSource | Clean Energy vs. Tsingtao Brewery |
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 Bonds Directory module to find actively traded corporate debentures issued by US companies.
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