Correlation Between IDEX and Clean Energy
Can any of the company-specific risk be diversified away by investing in both IDEX 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 IDEX and Clean Energy into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between IDEX Corporation and Clean Energy Technologies,, you can compare the effects of market volatilities on IDEX 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 IDEX with a short position of Clean Energy. Check out your portfolio center. Please also check ongoing floating volatility patterns of IDEX and Clean Energy.
Diversification Opportunities for IDEX and Clean Energy
-0.51 | Correlation Coefficient |
Excellent diversification
The 3 months correlation between IDEX and Clean is -0.51. Overlapping area represents the amount of risk that can be diversified away by holding IDEX Corp. and Clean Energy Technologies, in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Clean Energy Technol and IDEX 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 IDEX Corporation 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 Technol has no effect on the direction of IDEX i.e., IDEX and Clean Energy go up and down completely randomly.
Pair Corralation between IDEX and Clean Energy
Considering the 90-day investment horizon IDEX Corporation is expected to generate 0.23 times more return on investment than Clean Energy. However, IDEX Corporation is 4.36 times less risky than Clean Energy. It trades about 0.16 of its potential returns per unit of risk. Clean Energy Technologies, is currently generating about 0.0 per unit of risk. If you would invest 21,864 in IDEX Corporation on August 31, 2024 and sell it today you would earn a total of 1,246 from holding IDEX Corporation or generate 5.7% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Very Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
IDEX Corp. vs. Clean Energy Technologies,
Performance |
| Timeline |
| IDEX |
| Clean Energy Technol |
IDEX and Clean Energy Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with IDEX and Clean Energy
The main advantage of trading using opposite IDEX and Clean Energy positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if IDEX 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.| IDEX vs. Flowserve | IDEX vs. Franklin Electric Co | IDEX vs. Watts Water Technologies | IDEX vs. Gorman Rupp |
| Clean Energy vs. Graco Inc | Clean Energy vs. Franklin Electric Co | Clean Energy vs. Flowserve | Clean Energy vs. Donaldson |
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.
Other Complementary Tools
| Pair Correlation Compare performance and examine fundamental relationship between any two equity instruments | |
| Price Transformation Use Price Transformation models to analyze the depth of different equity instruments across global markets | |
| Equity Forecasting Use basic forecasting models to generate price predictions and determine price momentum | |
| Efficient Frontier Plot and analyze your portfolio and positions against risk-return landscape of the market. | |
| Portfolio Comparator Compare the composition, asset allocations and performance of any two portfolios in your account |