Correlation Between Clean Energy and Kaiser Aluminum
Can any of the company-specific risk be diversified away by investing in both Clean Energy and Kaiser Aluminum 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 Kaiser Aluminum 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 Kaiser Aluminum, you can compare the effects of market volatilities on Clean Energy and Kaiser Aluminum 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 Kaiser Aluminum. Check out your portfolio center. Please also check ongoing floating volatility patterns of Clean Energy and Kaiser Aluminum.
Diversification Opportunities for Clean Energy and Kaiser Aluminum
-0.31 | Correlation Coefficient |
Very good diversification
The 3 months correlation between Clean and Kaiser is -0.31. Overlapping area represents the amount of risk that can be diversified away by holding Clean Energy Fuels and Kaiser Aluminum in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Kaiser Aluminum 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 Kaiser Aluminum. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Kaiser Aluminum has no effect on the direction of Clean Energy i.e., Clean Energy and Kaiser Aluminum go up and down completely randomly.
Pair Corralation between Clean Energy and Kaiser Aluminum
Assuming the 90 days horizon Clean Energy Fuels is expected to generate 1.88 times more return on investment than Kaiser Aluminum. However, Clean Energy is 1.88 times more volatile than Kaiser Aluminum. It trades about 0.15 of its potential returns per unit of risk. Kaiser Aluminum is currently generating about -0.08 per unit of risk. If you would invest 273.00 in Clean Energy Fuels on November 18, 2024 and sell it today you would earn a total of 26.00 from holding Clean Energy Fuels or generate 9.52% 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. Kaiser Aluminum
Performance |
| Timeline |
| Clean Energy Fuels |
| Kaiser Aluminum |
Clean Energy and Kaiser Aluminum Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Clean Energy and Kaiser Aluminum
The main advantage of trading using opposite Clean Energy and Kaiser Aluminum positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Clean Energy position performs unexpectedly, Kaiser Aluminum 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 Kaiser Aluminum will offset losses from the drop in Kaiser Aluminum's long position.| Clean Energy vs. Diamyd Medical AB | Clean Energy vs. China BlueChemical | Clean Energy vs. CHEMICAL INDUSTRIES | Clean Energy vs. PEPTONIC MEDICAL |
| Kaiser Aluminum vs. NORWEGIAN AIR SHUT | Kaiser Aluminum vs. DELTA AIR LINES | Kaiser Aluminum vs. Ryanair Holdings plc | Kaiser Aluminum 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 Sync Your Broker module to sync your existing holdings, watchlists, positions or portfolios from thousands of online brokerage services, banks, investment account aggregators and robo-advisors..
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