Correlation Between Clean Energy and Alliance Data
Can any of the company-specific risk be diversified away by investing in both Clean Energy and Alliance Data 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 Alliance Data 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 Alliance Data Systems, you can compare the effects of market volatilities on Clean Energy and Alliance Data 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 Alliance Data. Check out your portfolio center. Please also check ongoing floating volatility patterns of Clean Energy and Alliance Data.
Diversification Opportunities for Clean Energy and Alliance Data
0.05 | Correlation Coefficient |
Significant diversification
The 3 months correlation between Clean and Alliance is 0.05. Overlapping area represents the amount of risk that can be diversified away by holding Clean Energy Fuels and Alliance Data Systems in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Alliance Data Systems 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 Alliance Data. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Alliance Data Systems has no effect on the direction of Clean Energy i.e., Clean Energy and Alliance Data go up and down completely randomly.
Pair Corralation between Clean Energy and Alliance Data
Assuming the 90 days horizon Clean Energy Fuels is expected to generate 2.01 times more return on investment than Alliance Data. However, Clean Energy is 2.01 times more volatile than Alliance Data Systems. It trades about 0.08 of its potential returns per unit of risk. Alliance Data Systems is currently generating about -0.08 per unit of risk. If you would invest 270.00 in Clean Energy Fuels on October 9, 2024 and sell it today you would earn a total of 9.00 from holding Clean Energy Fuels or generate 3.33% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Insignificant |
| Accuracy | 100.0% |
| Values | Daily Returns |
Clean Energy Fuels vs. Alliance Data Systems
Performance |
| Timeline |
| Clean Energy Fuels |
| Alliance Data Systems |
Clean Energy and Alliance Data Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Clean Energy and Alliance Data
The main advantage of trading using opposite Clean Energy and Alliance Data positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Clean Energy position performs unexpectedly, Alliance Data 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 Alliance Data will offset losses from the drop in Alliance Data's long position.| Clean Energy vs. NESTE OYJ UNSPADR | Clean Energy vs. Superior Plus Corp | Clean Energy vs. NMI Holdings | Clean Energy vs. SIVERS SEMICONDUCTORS AB |
| Alliance Data vs. Apple Inc | Alliance Data vs. Apple Inc | Alliance Data vs. Apple Inc | Alliance Data vs. Apple Inc |
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 Share Portfolio module to track or share privately all of your investments from the convenience of any device.
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