Correlation Between Clean Energy and KLA
Can any of the company-specific risk be diversified away by investing in both Clean Energy and KLA 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 KLA 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 KLA Corporation, you can compare the effects of market volatilities on Clean Energy and KLA 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 KLA. Check out your portfolio center. Please also check ongoing floating volatility patterns of Clean Energy and KLA.
Diversification Opportunities for Clean Energy and KLA
0.12 | Correlation Coefficient |
Average diversification
The 3 months correlation between Clean and KLA is 0.12. Overlapping area represents the amount of risk that can be diversified away by holding Clean Energy Fuels and KLA Corp. in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on KLA Corporation 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 KLA. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of KLA Corporation has no effect on the direction of Clean Energy i.e., Clean Energy and KLA go up and down completely randomly.
Pair Corralation between Clean Energy and KLA
Assuming the 90 days horizon Clean Energy Fuels is expected to generate 2.31 times more return on investment than KLA. However, Clean Energy is 2.31 times more volatile than KLA Corporation. It trades about 0.14 of its potential returns per unit of risk. KLA Corporation is currently generating about 0.03 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 | Insignificant |
| Accuracy | 95.65% |
| Values | Daily Returns |
Clean Energy Fuels vs. KLA Corp.
Performance |
| Timeline |
| Clean Energy Fuels |
| KLA Corporation |
Clean Energy and KLA Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Clean Energy and KLA
The main advantage of trading using opposite Clean Energy and KLA positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Clean Energy position performs unexpectedly, KLA 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 KLA will offset losses from the drop in KLA'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 |
| KLA vs. SAFETY MEDICAL PROD | KLA vs. Avanos Medical | KLA vs. AIR PRODCHEMICALS | KLA 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 Odds Of Bankruptcy module to get analysis of equity chance of financial distress in the next 2 years.
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