Correlation Between Archer Daniels and Clean Energy
Can any of the company-specific risk be diversified away by investing in both Archer Daniels 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 Archer Daniels and Clean Energy into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Archer Daniels Midland and Clean Energy Fuels, you can compare the effects of market volatilities on Archer Daniels 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 Archer Daniels with a short position of Clean Energy. Check out your portfolio center. Please also check ongoing floating volatility patterns of Archer Daniels and Clean Energy.
Diversification Opportunities for Archer Daniels and Clean Energy
-0.15 | Correlation Coefficient |
Good diversification
The 3 months correlation between Archer and Clean is -0.15. Overlapping area represents the amount of risk that can be diversified away by holding Archer Daniels Midland 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 Archer Daniels 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 Archer Daniels Midland 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 Archer Daniels i.e., Archer Daniels and Clean Energy go up and down completely randomly.
Pair Corralation between Archer Daniels and Clean Energy
Assuming the 90 days trading horizon Archer Daniels Midland is expected to under-perform the Clean Energy. But the stock apears to be less risky and, when comparing its historical volatility, Archer Daniels Midland is 1.87 times less risky than Clean Energy. The stock trades about -0.03 of its potential returns per unit of risk. The Clean Energy Fuels is currently generating about 0.0 of returns per unit of risk over similar time horizon. If you would invest 407.00 in Clean Energy Fuels on October 29, 2024 and sell it today you would lose (126.00) from holding Clean Energy Fuels or give up 30.96% of portfolio value over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Insignificant |
| Accuracy | 94.54% |
| Values | Daily Returns |
Archer Daniels Midland vs. Clean Energy Fuels
Performance |
| Timeline |
| Archer Daniels Midland |
| Clean Energy Fuels |
Archer Daniels and Clean Energy Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Archer Daniels and Clean Energy
The main advantage of trading using opposite Archer Daniels and Clean Energy positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Archer Daniels 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.| Archer Daniels vs. DETALION GAMES SA | Archer Daniels vs. Gaming and Leisure | Archer Daniels vs. Games Workshop Group | Archer Daniels vs. Penn National Gaming |
| 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 Portfolio Optimization module to compute new portfolio that will generate highest expected return given your specified tolerance for risk.
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