Correlation Between H M and Clean Energy
Can any of the company-specific risk be diversified away by investing in both H M 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 H M and Clean Energy into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between H M Hennes and Clean Energy Fuels, you can compare the effects of market volatilities on H M 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 H M with a short position of Clean Energy. Check out your portfolio center. Please also check ongoing floating volatility patterns of H M and Clean Energy.
Diversification Opportunities for H M and Clean Energy
0.21 | Correlation Coefficient |
Modest diversification
The 3 months correlation between HMSB and Clean is 0.21. Overlapping area represents the amount of risk that can be diversified away by holding H M Hennes 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 H M 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 H M Hennes 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 H M i.e., H M and Clean Energy go up and down completely randomly.
Pair Corralation between H M and Clean Energy
Assuming the 90 days trading horizon H M Hennes is expected to generate 1.07 times more return on investment than Clean Energy. However, H M is 1.07 times more volatile than Clean Energy Fuels. It trades about 0.09 of its potential returns per unit of risk. Clean Energy Fuels is currently generating about -0.04 per unit of risk. If you would invest 1,176 in H M Hennes on August 28, 2024 and sell it today you would earn a total of 171.00 from holding H M Hennes or generate 14.54% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Very Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
H M Hennes vs. Clean Energy Fuels
Performance |
| Timeline |
| H M Hennes |
| Clean Energy Fuels |
H M and Clean Energy Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with H M and Clean Energy
The main advantage of trading using opposite H M and Clean Energy positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if H M 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.| H M vs. Clean Energy Fuels | H M vs. Fukuyama Transporting Co | H M vs. Gaztransport Technigaz SA | H M vs. Air Transport Services |
| Clean Energy vs. Coor Service Management | Clean Energy vs. The Trade Desk | Clean Energy vs. Platinum Investment Management | Clean Energy vs. Fast Retailing Co |
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 Positions Ratings module to determine portfolio positions ratings based on digital equity recommendations. Macroaxis instant position ratings are based on combination of fundamental analysis and risk-adjusted market performance.
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