Correlation Between Clean Energy and COSTCO WHOLESALE
Can any of the company-specific risk be diversified away by investing in both Clean Energy and COSTCO WHOLESALE 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 COSTCO WHOLESALE 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 COSTCO WHOLESALE CDR, you can compare the effects of market volatilities on Clean Energy and COSTCO WHOLESALE 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 COSTCO WHOLESALE. Check out your portfolio center. Please also check ongoing floating volatility patterns of Clean Energy and COSTCO WHOLESALE.
Diversification Opportunities for Clean Energy and COSTCO WHOLESALE
-0.08 | Correlation Coefficient |
Good diversification
The 3 months correlation between Clean and COSTCO is -0.08. Overlapping area represents the amount of risk that can be diversified away by holding Clean Energy Fuels and COSTCO WHOLESALE CDR in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on COSTCO WHOLESALE CDR 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 COSTCO WHOLESALE. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of COSTCO WHOLESALE CDR has no effect on the direction of Clean Energy i.e., Clean Energy and COSTCO WHOLESALE go up and down completely randomly.
Pair Corralation between Clean Energy and COSTCO WHOLESALE
Assuming the 90 days horizon Clean Energy Fuels is expected to generate 1.49 times more return on investment than COSTCO WHOLESALE. However, Clean Energy is 1.49 times more volatile than COSTCO WHOLESALE CDR. It trades about 0.23 of its potential returns per unit of risk. COSTCO WHOLESALE CDR is currently generating about 0.14 per unit of risk. If you would invest 279.00 in Clean Energy Fuels on November 4, 2024 and sell it today you would earn a total of 38.00 from holding Clean Energy Fuels or generate 13.62% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Insignificant |
| Accuracy | 95.45% |
| Values | Daily Returns |
Clean Energy Fuels vs. COSTCO WHOLESALE CDR
Performance |
| Timeline |
| Clean Energy Fuels |
| COSTCO WHOLESALE CDR |
Clean Energy and COSTCO WHOLESALE Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Clean Energy and COSTCO WHOLESALE
The main advantage of trading using opposite Clean Energy and COSTCO WHOLESALE positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Clean Energy position performs unexpectedly, COSTCO WHOLESALE 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 COSTCO WHOLESALE will offset losses from the drop in COSTCO WHOLESALE's long position.| Clean Energy vs. DETALION GAMES SA | Clean Energy vs. Teradata Corp | Clean Energy vs. GameStop Corp | Clean Energy vs. Media and Games |
| COSTCO WHOLESALE vs. VULCAN MATERIALS | COSTCO WHOLESALE vs. Sumitomo Rubber Industries | COSTCO WHOLESALE vs. GOODYEAR T RUBBER | COSTCO WHOLESALE vs. CARDINAL HEALTH |
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 Global Markets Map module to get a quick overview of global market snapshot using zoomable world map. Drill down to check world indexes.
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