Correlation Between Cars and CLEAN ENERGY
Can any of the company-specific risk be diversified away by investing in both Cars 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 Cars and CLEAN ENERGY into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Cars Inc and CLEAN ENERGY FUELS, you can compare the effects of market volatilities on Cars 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 Cars with a short position of CLEAN ENERGY. Check out your portfolio center. Please also check ongoing floating volatility patterns of Cars and CLEAN ENERGY.
Diversification Opportunities for Cars and CLEAN ENERGY
0.13 | Correlation Coefficient |
Average diversification
The 3 months correlation between Cars and CLEAN is 0.13. Overlapping area represents the amount of risk that can be diversified away by holding Cars Inc 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 Cars 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 Cars Inc 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 Cars i.e., Cars and CLEAN ENERGY go up and down completely randomly.
Pair Corralation between Cars and CLEAN ENERGY
Assuming the 90 days horizon Cars Inc is expected to generate 0.81 times more return on investment than CLEAN ENERGY. However, Cars Inc is 1.23 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 1,460 in Cars Inc on October 13, 2024 and sell it today you would earn a total of 160.00 from holding Cars Inc or generate 10.96% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Insignificant |
| Accuracy | 99.8% |
| Values | Daily Returns |
Cars Inc vs. CLEAN ENERGY FUELS
Performance |
| Timeline |
| Cars Inc |
| CLEAN ENERGY FUELS |
Cars and CLEAN ENERGY Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Cars and CLEAN ENERGY
The main advantage of trading using opposite Cars and CLEAN ENERGY positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Cars 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.| Cars vs. SENECA FOODS A | Cars vs. Keck Seng Investments | Cars vs. INDOFOOD AGRI RES | Cars vs. Japan Asia Investment |
| CLEAN ENERGY vs. Coor Service Management | CLEAN ENERGY vs. CeoTronics AG | CLEAN ENERGY vs. FIREWEED METALS P | CLEAN ENERGY vs. Western Copper and |
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 Watchlist Optimization module to optimize watchlists to build efficient portfolios or rebalance existing positions based on the mean-variance optimization algorithm.
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