Correlation Between Clean Energy and Archer Daniels
Can any of the company-specific risk be diversified away by investing in both Clean Energy and Archer Daniels 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 Archer Daniels 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 Archer Daniels Midland, you can compare the effects of market volatilities on Clean Energy and Archer Daniels 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 Archer Daniels. Check out your portfolio center. Please also check ongoing floating volatility patterns of Clean Energy and Archer Daniels.
Diversification Opportunities for Clean Energy and Archer Daniels
-0.15 | Correlation Coefficient |
Good diversification
The 3 months correlation between Clean and Archer is -0.15. Overlapping area represents the amount of risk that can be diversified away by holding Clean Energy Fuels and Archer Daniels Midland in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Archer Daniels Midland 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 Archer Daniels. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Archer Daniels Midland has no effect on the direction of Clean Energy i.e., Clean Energy and Archer Daniels go up and down completely randomly.
Pair Corralation between Clean Energy and Archer Daniels
Assuming the 90 days horizon Clean Energy Fuels is expected to generate 3.08 times more return on investment than Archer Daniels. However, Clean Energy is 3.08 times more volatile than Archer Daniels Midland. It trades about 0.22 of its potential returns per unit of risk. Archer Daniels Midland is currently generating about -0.06 per unit of risk. If you would invest 247.00 in Clean Energy Fuels on October 29, 2024 and sell it today you would earn a total of 34.00 from holding Clean Energy Fuels or generate 13.77% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Insignificant |
| Accuracy | 100.0% |
| Values | Daily Returns |
Clean Energy Fuels vs. Archer Daniels Midland
Performance |
| Timeline |
| Clean Energy Fuels |
| Archer Daniels Midland |
Clean Energy and Archer Daniels Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Clean Energy and Archer Daniels
The main advantage of trading using opposite Clean Energy and Archer Daniels positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Clean Energy position performs unexpectedly, Archer Daniels 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 Archer Daniels will offset losses from the drop in Archer Daniels' long position.| Clean Energy vs. MOLSON RS BEVERAGE | Clean Energy vs. National Beverage Corp | Clean Energy vs. ScanSource | Clean Energy vs. Tsingtao Brewery |
| Archer Daniels vs. DETALION GAMES SA | Archer Daniels vs. Gaming and Leisure | Archer Daniels vs. Games Workshop Group | Archer Daniels vs. Penn National Gaming |
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 Watchlist Optimization module to optimize watchlists to build efficient portfolios or rebalance existing positions based on the mean-variance optimization algorithm.
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