Correlation Between BRIT AMER and Clean Energy
Can any of the company-specific risk be diversified away by investing in both BRIT AMER 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 BRIT AMER and Clean Energy into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between BRIT AMER TOBACCO and Clean Energy Fuels, you can compare the effects of market volatilities on BRIT AMER 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 BRIT AMER with a short position of Clean Energy. Check out your portfolio center. Please also check ongoing floating volatility patterns of BRIT AMER and Clean Energy.
Diversification Opportunities for BRIT AMER and Clean Energy
0.08 | Correlation Coefficient |
Significant diversification
The 3 months correlation between BRIT and Clean is 0.08. Overlapping area represents the amount of risk that can be diversified away by holding BRIT AMER TOBACCO 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 BRIT AMER 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 BRIT AMER TOBACCO 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 BRIT AMER i.e., BRIT AMER and Clean Energy go up and down completely randomly.
Pair Corralation between BRIT AMER and Clean Energy
Assuming the 90 days trading horizon BRIT AMER TOBACCO is expected to generate 0.3 times more return on investment than Clean Energy. However, BRIT AMER TOBACCO is 3.38 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 -0.01 per unit of risk. If you would invest 3,336 in BRIT AMER TOBACCO on September 3, 2024 and sell it today you would earn a total of 255.00 from holding BRIT AMER TOBACCO or generate 7.64% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Insignificant |
| Accuracy | 100.0% |
| Values | Daily Returns |
BRIT AMER TOBACCO vs. Clean Energy Fuels
Performance |
| Timeline |
| BRIT AMER TOBACCO |
| Clean Energy Fuels |
BRIT AMER and Clean Energy Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with BRIT AMER and Clean Energy
The main advantage of trading using opposite BRIT AMER and Clean Energy positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if BRIT AMER 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.| BRIT AMER vs. FEMALE HEALTH | BRIT AMER vs. PARKEN Sport Entertainment | BRIT AMER vs. Amkor Technology | BRIT AMER vs. CVS Health |
| Clean Energy vs. Marathon Petroleum Corp | Clean Energy vs. Neste Oyj | Clean Energy vs. ENEOS Holdings | Clean Energy vs. PTT OILRETBUS FOR BA10 |
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 Suggestion module to get suggestions outside of your existing asset allocation including your own model portfolios.
Other Complementary Tools
| Equity Forecasting Use basic forecasting models to generate price predictions and determine price momentum | |
| Content Syndication Quickly integrate customizable finance content to your own investment portal | |
| ETFs Find actively traded Exchange Traded Funds (ETF) from around the world | |
| Equity Valuation Check real value of public entities based on technical and fundamental data | |
| Watchlist Optimization Optimize watchlists to build efficient portfolios or rebalance existing positions based on the mean-variance optimization algorithm |