Correlation Between FIH MOBILE and Clean Energy
Can any of the company-specific risk be diversified away by investing in both FIH MOBILE 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 FIH MOBILE and Clean Energy into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between FIH MOBILE and Clean Energy Fuels, you can compare the effects of market volatilities on FIH MOBILE 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 FIH MOBILE with a short position of Clean Energy. Check out your portfolio center. Please also check ongoing floating volatility patterns of FIH MOBILE and Clean Energy.
Diversification Opportunities for FIH MOBILE and Clean Energy
-0.2 | Correlation Coefficient |
Good diversification
The 3 months correlation between FIH and Clean is -0.2. Overlapping area represents the amount of risk that can be diversified away by holding FIH MOBILE 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 FIH MOBILE 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 FIH MOBILE 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 FIH MOBILE i.e., FIH MOBILE and Clean Energy go up and down completely randomly.
Pair Corralation between FIH MOBILE and Clean Energy
Assuming the 90 days trading horizon FIH MOBILE is expected to generate 0.43 times more return on investment than Clean Energy. However, FIH MOBILE is 2.32 times less risky than Clean Energy. It trades about 0.01 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 10.00 in FIH MOBILE on December 2, 2024 and sell it today you would earn a total of 0.00 from holding FIH MOBILE or generate 0.0% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Insignificant |
| Accuracy | 100.0% |
| Values | Daily Returns |
FIH MOBILE vs. Clean Energy Fuels
Performance |
| Timeline |
| FIH MOBILE |
| Clean Energy Fuels |
FIH MOBILE and Clean Energy Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with FIH MOBILE and Clean Energy
The main advantage of trading using opposite FIH MOBILE and Clean Energy positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if FIH MOBILE 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.The idea behind FIH MOBILE and Clean Energy Fuels pairs trading is to make the combined position market-neutral, meaning the overall market's direction will not affect its win or loss (or potential downside or upside). This can be achieved by designing a pairs trade with two highly correlated stocks or equities that operate in a similar space or sector, making it possible to obtain profits through simple and relatively low-risk investment.| Clean Energy vs. Ribbon Communications | ||
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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 Earnings Calls module to check upcoming earnings announcements updated hourly across public exchanges.
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