Correlation Between REINET INVESTMENTS and Clean Energy
Can any of the company-specific risk be diversified away by investing in both REINET INVESTMENTS 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 REINET INVESTMENTS and Clean Energy into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between REINET INVESTMENTS SCA and Clean Energy Fuels, you can compare the effects of market volatilities on REINET INVESTMENTS 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 REINET INVESTMENTS with a short position of Clean Energy. Check out your portfolio center. Please also check ongoing floating volatility patterns of REINET INVESTMENTS and Clean Energy.
Diversification Opportunities for REINET INVESTMENTS and Clean Energy
-0.13 | Correlation Coefficient |
Good diversification
The 3 months correlation between REINET and Clean is -0.13. Overlapping area represents the amount of risk that can be diversified away by holding REINET INVESTMENTS SCA 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 REINET INVESTMENTS 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 REINET INVESTMENTS SCA 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 REINET INVESTMENTS i.e., REINET INVESTMENTS and Clean Energy go up and down completely randomly.
Pair Corralation between REINET INVESTMENTS and Clean Energy
Assuming the 90 days horizon REINET INVESTMENTS is expected to generate 1.23 times less return on investment than Clean Energy. But when comparing it to its historical volatility, REINET INVESTMENTS SCA is 1.53 times less risky than Clean Energy. It trades about 0.05 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 228.00 in Clean Energy Fuels on August 27, 2024 and sell it today you would earn a total of 18.00 from holding Clean Energy Fuels or generate 7.89% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Insignificant |
| Accuracy | 100.0% |
| Values | Daily Returns |
REINET INVESTMENTS SCA vs. Clean Energy Fuels
Performance |
| Timeline |
| REINET INVESTMENTS SCA |
| Clean Energy Fuels |
REINET INVESTMENTS and Clean Energy Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with REINET INVESTMENTS and Clean Energy
The main advantage of trading using opposite REINET INVESTMENTS and Clean Energy positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if REINET INVESTMENTS 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.| REINET INVESTMENTS vs. LION ONE METALS | REINET INVESTMENTS vs. Sumitomo Rubber Industries | REINET INVESTMENTS vs. SANOK RUBBER ZY | REINET INVESTMENTS vs. ScanSource |
| Clean Energy vs. Superior Plus Corp | Clean Energy vs. NMI Holdings | Clean Energy vs. Origin Agritech | Clean Energy vs. SIVERS SEMICONDUCTORS AB |
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 Price Ceiling Movement module to calculate and plot Price Ceiling Movement for different equity instruments.
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