Correlation Between Performance Food and Clean Energy
Can any of the company-specific risk be diversified away by investing in both Performance Food 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 Performance Food and Clean Energy into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Performance Food Group and Clean Energy Fuels, you can compare the effects of market volatilities on Performance Food 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 Performance Food with a short position of Clean Energy. Check out your portfolio center. Please also check ongoing floating volatility patterns of Performance Food and Clean Energy.
Diversification Opportunities for Performance Food and Clean Energy
0.07 | Correlation Coefficient |
Significant diversification
The 3 months correlation between Performance and Clean is 0.07. Overlapping area represents the amount of risk that can be diversified away by holding Performance Food Group 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 Performance Food 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 Performance Food Group 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 Performance Food i.e., Performance Food and Clean Energy go up and down completely randomly.
Pair Corralation between Performance Food and Clean Energy
Assuming the 90 days horizon Performance Food is expected to generate 2.15 times less return on investment than Clean Energy. But when comparing it to its historical volatility, Performance Food Group is 3.03 times less risky than Clean Energy. It trades about 0.1 of its potential returns per unit of risk. Clean Energy Fuels is currently generating about 0.07 of returns per unit of risk over similar time horizon. If you would invest 252.00 in Clean Energy Fuels on September 15, 2024 and sell it today you would earn a total of 13.00 from holding Clean Energy Fuels or generate 5.16% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Insignificant |
| Accuracy | 100.0% |
| Values | Daily Returns |
Performance Food Group vs. Clean Energy Fuels
Performance |
| Timeline |
| Performance Food |
| Clean Energy Fuels |
Performance Food and Clean Energy Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Performance Food and Clean Energy
The main advantage of trading using opposite Performance Food and Clean Energy positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Performance Food 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.| Performance Food vs. Zoom Video Communications | Performance Food vs. SOFI TECHNOLOGIES | Performance Food vs. GLG LIFE TECH | Performance Food vs. Spirent Communications plc |
| Clean Energy vs. COPLAND ROAD CAPITAL | Clean Energy vs. Transport International Holdings | Clean Energy vs. TRAINLINE PLC LS | Clean Energy vs. MINCO SILVER |
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 Cryptocurrency Center module to build and monitor diversified portfolio of extremely risky digital assets and cryptocurrency.
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