Correlation Between ULTRA CLEAN and Clean Energy
Can any of the company-specific risk be diversified away by investing in both ULTRA CLEAN 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 ULTRA CLEAN and Clean Energy into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between ULTRA CLEAN HLDGS and Clean Energy Fuels, you can compare the effects of market volatilities on ULTRA CLEAN 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 ULTRA CLEAN with a short position of Clean Energy. Check out your portfolio center. Please also check ongoing floating volatility patterns of ULTRA CLEAN and Clean Energy.
Diversification Opportunities for ULTRA CLEAN and Clean Energy
0.26 | Correlation Coefficient |
Modest diversification
The 3 months correlation between ULTRA and Clean is 0.26. Overlapping area represents the amount of risk that can be diversified away by holding ULTRA CLEAN HLDGS 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 ULTRA CLEAN 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 ULTRA CLEAN HLDGS 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 ULTRA CLEAN i.e., ULTRA CLEAN and Clean Energy go up and down completely randomly.
Pair Corralation between ULTRA CLEAN and Clean Energy
Assuming the 90 days trading horizon ULTRA CLEAN HLDGS is expected to generate 0.51 times more return on investment than Clean Energy. However, ULTRA CLEAN HLDGS is 1.98 times less risky than Clean Energy. It trades about 0.33 of its potential returns per unit of risk. Clean Energy Fuels is currently generating about 0.12 per unit of risk. If you would invest 3,160 in ULTRA CLEAN HLDGS on September 4, 2024 and sell it today you would earn a total of 660.00 from holding ULTRA CLEAN HLDGS or generate 20.89% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Very Weak |
| Accuracy | 95.45% |
| Values | Daily Returns |
ULTRA CLEAN HLDGS vs. Clean Energy Fuels
Performance |
| Timeline |
| ULTRA CLEAN HLDGS |
| Clean Energy Fuels |
ULTRA CLEAN and Clean Energy Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with ULTRA CLEAN and Clean Energy
The main advantage of trading using opposite ULTRA CLEAN and Clean Energy positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if ULTRA CLEAN 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.| ULTRA CLEAN vs. TOTAL GABON | ULTRA CLEAN vs. Walgreens Boots Alliance | ULTRA CLEAN vs. Peak Resources Limited |
| Clean Energy vs. Marathon Petroleum Corp | Clean Energy vs. Neste Oyj | Clean Energy vs. ENEOS Holdings | Clean Energy vs. PTT OILRETBUS FOR BA10 |
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 Comparator module to compare the composition, asset allocations and performance of any two portfolios in your account.
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