Correlation Between IMPERIAL TOBACCO and Clean Energy
Can any of the company-specific risk be diversified away by investing in both IMPERIAL TOBACCO 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 IMPERIAL TOBACCO and Clean Energy into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between IMPERIAL TOBACCO and Clean Energy Fuels, you can compare the effects of market volatilities on IMPERIAL TOBACCO 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 IMPERIAL TOBACCO with a short position of Clean Energy. Check out your portfolio center. Please also check ongoing floating volatility patterns of IMPERIAL TOBACCO and Clean Energy.
Diversification Opportunities for IMPERIAL TOBACCO and Clean Energy
-0.31 | Correlation Coefficient |
Very good diversification
The 3 months correlation between IMPERIAL and Clean is -0.31. Overlapping area represents the amount of risk that can be diversified away by holding IMPERIAL TOBACCO 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 IMPERIAL TOBACCO 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 IMPERIAL TOBACCO 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 IMPERIAL TOBACCO i.e., IMPERIAL TOBACCO and Clean Energy go up and down completely randomly.
Pair Corralation between IMPERIAL TOBACCO and Clean Energy
Assuming the 90 days trading horizon IMPERIAL TOBACCO is expected to generate 0.25 times more return on investment than Clean Energy. However, IMPERIAL TOBACCO is 4.01 times less risky than Clean Energy. It trades about 0.57 of its potential returns per unit of risk. Clean Energy Fuels is currently generating about 0.0 per unit of risk. If you would invest 2,729 in IMPERIAL TOBACCO on August 30, 2024 and sell it today you would earn a total of 422.00 from holding IMPERIAL TOBACCO or generate 15.46% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Insignificant |
| Accuracy | 100.0% |
| Values | Daily Returns |
IMPERIAL TOBACCO vs. Clean Energy Fuels
Performance |
| Timeline |
| IMPERIAL TOBACCO |
| Clean Energy Fuels |
IMPERIAL TOBACCO and Clean Energy Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with IMPERIAL TOBACCO and Clean Energy
The main advantage of trading using opposite IMPERIAL TOBACCO and Clean Energy positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if IMPERIAL TOBACCO 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.| IMPERIAL TOBACCO vs. Apple Inc | IMPERIAL TOBACCO vs. Apple Inc | IMPERIAL TOBACCO vs. Superior Plus Corp | IMPERIAL TOBACCO vs. SIVERS SEMICONDUCTORS AB |
| Clean Energy vs. Neste Oyj | Clean Energy vs. Superior Plus Corp | Clean Energy vs. NMI Holdings | Clean Energy vs. Origin Agritech |
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 Stocks Directory module to find actively traded stocks across global markets.
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