Correlation Between PTL and Clean Energy
Can any of the company-specific risk be diversified away by investing in both PTL 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 PTL and Clean Energy into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between PTL LTD Ordinary and Clean Energy Fuels, you can compare the effects of market volatilities on PTL 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 PTL with a short position of Clean Energy. Check out your portfolio center. Please also check ongoing floating volatility patterns of PTL and Clean Energy.
Diversification Opportunities for PTL and Clean Energy
-0.59 | Correlation Coefficient |
Excellent diversification
The 3 months correlation between PTL and Clean is -0.59. Overlapping area represents the amount of risk that can be diversified away by holding PTL LTD Ordinary 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 PTL 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 PTL LTD Ordinary 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 PTL i.e., PTL and Clean Energy go up and down completely randomly.
Pair Corralation between PTL and Clean Energy
Given the investment horizon of 90 days PTL LTD Ordinary is expected to under-perform the Clean Energy. In addition to that, PTL is 3.77 times more volatile than Clean Energy Fuels. It trades about -0.01 of its total potential returns per unit of risk. Clean Energy Fuels is currently generating about -0.01 per unit of volatility. If you would invest 443.00 in Clean Energy Fuels on November 26, 2024 and sell it today you would lose (172.00) from holding Clean Energy Fuels or give up 38.83% of portfolio value over 90 days.
Time Period | 3 Months [change] |
Direction | Moves Against |
Strength | Very Weak |
Accuracy | 17.98% |
Values | Daily Returns |
PTL LTD Ordinary vs. Clean Energy Fuels
Performance |
Timeline |
PTL LTD Ordinary |
Clean Energy Fuels |
PTL and Clean Energy Volatility Contrast
Predicted Return Density |
Returns |
Pair Trading with PTL and Clean Energy
The main advantage of trading using opposite PTL and Clean Energy positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if PTL 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.PTL vs. PennantPark Floating Rate | ||
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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 Portfolio Backtesting module to avoid under-diversification and over-optimization by backtesting your portfolios.
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