Correlation Between Informa PLC and Clean Energy
Can any of the company-specific risk be diversified away by investing in both Informa PLC 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 Informa PLC and Clean Energy into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Informa PLC and Clean Energy Fuels, you can compare the effects of market volatilities on Informa PLC 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 Informa PLC with a short position of Clean Energy. Check out your portfolio center. Please also check ongoing floating volatility patterns of Informa PLC and Clean Energy.
Diversification Opportunities for Informa PLC and Clean Energy
0.22 | Correlation Coefficient |
Modest diversification
The 3 months correlation between Informa and Clean is 0.22. Overlapping area represents the amount of risk that can be diversified away by holding Informa PLC 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 Informa PLC 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 Informa PLC 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 Informa PLC i.e., Informa PLC and Clean Energy go up and down completely randomly.
Pair Corralation between Informa PLC and Clean Energy
Assuming the 90 days horizon Informa PLC is expected to generate 1.41 times less return on investment than Clean Energy. But when comparing it to its historical volatility, Informa PLC is 3.04 times less risky than Clean Energy. It trades about 0.09 of its potential returns per unit of risk. Clean Energy Fuels is currently generating about 0.04 of returns per unit of risk over similar time horizon. If you would invest 253.00 in Clean Energy Fuels on September 13, 2024 and sell it today you would earn a total of 10.00 from holding Clean Energy Fuels or generate 3.95% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Very Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
Informa PLC vs. Clean Energy Fuels
Performance |
| Timeline |
| Informa PLC |
| Clean Energy Fuels |
Informa PLC and Clean Energy Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Informa PLC and Clean Energy
The main advantage of trading using opposite Informa PLC and Clean Energy positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Informa PLC 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.| Informa PLC vs. Perseus Mining Limited | Informa PLC vs. Zoom Video Communications | Informa PLC vs. Lion One Metals | Informa PLC vs. Zijin Mining Group |
| Clean Energy vs. American Eagle Outfitters | Clean Energy vs. NORWEGIAN AIR SHUT | Clean Energy vs. SYSTEMAIR AB | Clean Energy vs. Westinghouse Air Brake |
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 Commodity Directory module to find actively traded commodities issued by global exchanges.
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