Correlation Between Clean Energy and New Residential
Can any of the company-specific risk be diversified away by investing in both Clean Energy and New Residential 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 New Residential 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 New Residential Investment, you can compare the effects of market volatilities on Clean Energy and New Residential 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 New Residential. Check out your portfolio center. Please also check ongoing floating volatility patterns of Clean Energy and New Residential.
Diversification Opportunities for Clean Energy and New Residential
0.21 | Correlation Coefficient |
Modest diversification
The 3 months correlation between Clean and New is 0.21. Overlapping area represents the amount of risk that can be diversified away by holding Clean Energy Fuels and New Residential Investment in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on New Residential Inve 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 New Residential. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of New Residential Inve has no effect on the direction of Clean Energy i.e., Clean Energy and New Residential go up and down completely randomly.
Pair Corralation between Clean Energy and New Residential
Assuming the 90 days horizon Clean Energy Fuels is expected to generate 4.9 times more return on investment than New Residential. However, Clean Energy is 4.9 times more volatile than New Residential Investment. It trades about 0.14 of its potential returns per unit of risk. New Residential Investment is currently generating about 0.36 per unit of risk. If you would invest 255.00 in Clean Energy Fuels on September 1, 2024 and sell it today you would earn a total of 36.00 from holding Clean Energy Fuels or generate 14.12% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Very Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
Clean Energy Fuels vs. New Residential Investment
Performance |
| Timeline |
| Clean Energy Fuels |
| New Residential Inve |
Clean Energy and New Residential Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Clean Energy and New Residential
The main advantage of trading using opposite Clean Energy and New Residential positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Clean Energy position performs unexpectedly, New Residential 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 New Residential will offset losses from the drop in New Residential's long position.| Clean Energy vs. Japan Medical Dynamic | Clean Energy vs. AVITA Medical | Clean Energy vs. Cardinal Health | Clean Energy vs. Diamyd Medical AB |
| New Residential vs. TRAINLINE PLC LS | New Residential vs. Soken Chemical Engineering | New Residential vs. Siamgas And Petrochemicals | New Residential vs. SEKISUI CHEMICAL |
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 Analyst Advice module to analyst recommendations and target price estimates broken down by several categories.
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