Correlation Between Clean Energy and LINCOLN EDUCATSERVICES
Can any of the company-specific risk be diversified away by investing in both Clean Energy and LINCOLN EDUCATSERVICES 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 LINCOLN EDUCATSERVICES 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 LINCOLN EDUCATSERVICES, you can compare the effects of market volatilities on Clean Energy and LINCOLN EDUCATSERVICES 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 LINCOLN EDUCATSERVICES. Check out your portfolio center. Please also check ongoing floating volatility patterns of Clean Energy and LINCOLN EDUCATSERVICES.
Diversification Opportunities for Clean Energy and LINCOLN EDUCATSERVICES
0.05 | Correlation Coefficient |
Significant diversification
The 3 months correlation between Clean and LINCOLN is 0.05. Overlapping area represents the amount of risk that can be diversified away by holding Clean Energy Fuels and LINCOLN EDUCATSERVICES in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on LINCOLN EDUCATSERVICES 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 LINCOLN EDUCATSERVICES. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of LINCOLN EDUCATSERVICES has no effect on the direction of Clean Energy i.e., Clean Energy and LINCOLN EDUCATSERVICES go up and down completely randomly.
Pair Corralation between Clean Energy and LINCOLN EDUCATSERVICES
Assuming the 90 days horizon Clean Energy Fuels is expected to under-perform the LINCOLN EDUCATSERVICES. In addition to that, Clean Energy is 1.63 times more volatile than LINCOLN EDUCATSERVICES. It trades about -0.02 of its total potential returns per unit of risk. LINCOLN EDUCATSERVICES is currently generating about 0.03 per unit of volatility. If you would invest 1,500 in LINCOLN EDUCATSERVICES on September 12, 2024 and sell it today you would earn a total of 20.00 from holding LINCOLN EDUCATSERVICES or generate 1.33% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Insignificant |
| Accuracy | 95.65% |
| Values | Daily Returns |
Clean Energy Fuels vs. LINCOLN EDUCATSERVICES
Performance |
| Timeline |
| Clean Energy Fuels |
| LINCOLN EDUCATSERVICES |
Clean Energy and LINCOLN EDUCATSERVICES Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Clean Energy and LINCOLN EDUCATSERVICES
The main advantage of trading using opposite Clean Energy and LINCOLN EDUCATSERVICES positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Clean Energy position performs unexpectedly, LINCOLN EDUCATSERVICES 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 LINCOLN EDUCATSERVICES will offset losses from the drop in LINCOLN EDUCATSERVICES's long position.| Clean Energy vs. NISSAN CHEMICAL IND | Clean Energy vs. PRECISION DRILLING P | Clean Energy vs. Consolidated Communications Holdings | Clean Energy vs. Nissan Chemical Corp |
| LINCOLN EDUCATSERVICES vs. Bausch Health Companies | LINCOLN EDUCATSERVICES vs. KAUFMAN ET BROAD | LINCOLN EDUCATSERVICES vs. Cardinal Health | LINCOLN EDUCATSERVICES vs. BROADSTNET LEADL 00025 |
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 Pair Correlation module to compare performance and examine fundamental relationship between any two equity instruments.
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