Correlation Between CLEAN ENERGY and SPARTAN STORES
Can any of the company-specific risk be diversified away by investing in both CLEAN ENERGY and SPARTAN STORES 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 CLEAN ENERGY and SPARTAN STORES into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between CLEAN ENERGY FUELS and SPARTAN STORES, you can compare the effects of market volatilities on CLEAN ENERGY and SPARTAN STORES 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 CLEAN ENERGY with a short position of SPARTAN STORES. Check out your portfolio center. Please also check ongoing floating volatility patterns of CLEAN ENERGY and SPARTAN STORES.
Diversification Opportunities for CLEAN ENERGY and SPARTAN STORES
0.02 | Correlation Coefficient |
Significant diversification
The 3 months correlation between CLEAN and SPARTAN is 0.02. Overlapping area represents the amount of risk that can be diversified away by holding CLEAN ENERGY FUELS and SPARTAN STORES in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on SPARTAN STORES and CLEAN ENERGY 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 CLEAN ENERGY FUELS are associated (or correlated) with SPARTAN STORES. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of SPARTAN STORES has no effect on the direction of CLEAN ENERGY i.e., CLEAN ENERGY and SPARTAN STORES go up and down completely randomly.
Pair Corralation between CLEAN ENERGY and SPARTAN STORES
Assuming the 90 days trading horizon CLEAN ENERGY FUELS is expected to generate 2.19 times more return on investment than SPARTAN STORES. However, CLEAN ENERGY is 2.19 times more volatile than SPARTAN STORES. It trades about 0.23 of its potential returns per unit of risk. SPARTAN STORES is currently generating about -0.22 per unit of risk. If you would invest 261.00 in CLEAN ENERGY FUELS on October 15, 2024 and sell it today you would earn a total of 31.00 from holding CLEAN ENERGY FUELS or generate 11.88% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Insignificant |
| Accuracy | 100.0% |
| Values | Daily Returns |
CLEAN ENERGY FUELS vs. SPARTAN STORES
Performance |
| Timeline |
| CLEAN ENERGY FUELS |
| SPARTAN STORES |
CLEAN ENERGY and SPARTAN STORES Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with CLEAN ENERGY and SPARTAN STORES
The main advantage of trading using opposite CLEAN ENERGY and SPARTAN STORES positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if CLEAN ENERGY position performs unexpectedly, SPARTAN STORES 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 SPARTAN STORES will offset losses from the drop in SPARTAN STORES's long position.| CLEAN ENERGY vs. Apple Inc | CLEAN ENERGY vs. Apple Inc | CLEAN ENERGY vs. Apple Inc | CLEAN ENERGY vs. Apple Inc |
| SPARTAN STORES vs. PKSHA TECHNOLOGY INC | SPARTAN STORES vs. BioNTech SE | SPARTAN STORES vs. Digilife Technologies Limited | SPARTAN STORES vs. CLEAN ENERGY FUELS |
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 Bonds Directory module to find actively traded corporate debentures issued by US companies.
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