Correlation Between Clean Energy and NH HOTEL
Can any of the company-specific risk be diversified away by investing in both Clean Energy and NH HOTEL 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 NH HOTEL 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 NH HOTEL GROUP, you can compare the effects of market volatilities on Clean Energy and NH HOTEL 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 NH HOTEL. Check out your portfolio center. Please also check ongoing floating volatility patterns of Clean Energy and NH HOTEL.
Diversification Opportunities for Clean Energy and NH HOTEL
-0.02 | Correlation Coefficient |
Good diversification
The 3 months correlation between Clean and NH5 is -0.02. Overlapping area represents the amount of risk that can be diversified away by holding Clean Energy Fuels and NH HOTEL GROUP in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on NH HOTEL GROUP 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 NH HOTEL. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of NH HOTEL GROUP has no effect on the direction of Clean Energy i.e., Clean Energy and NH HOTEL go up and down completely randomly.
Pair Corralation between Clean Energy and NH HOTEL
Assuming the 90 days horizon Clean Energy Fuels is expected to under-perform the NH HOTEL. In addition to that, Clean Energy is 1.4 times more volatile than NH HOTEL GROUP. It trades about -0.05 of its total potential returns per unit of risk. NH HOTEL GROUP is currently generating about 0.08 per unit of volatility. If you would invest 418.00 in NH HOTEL GROUP on September 12, 2024 and sell it today you would earn a total of 19.00 from holding NH HOTEL GROUP or generate 4.55% 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. NH HOTEL GROUP
Performance |
| Timeline |
| Clean Energy Fuels |
| NH HOTEL GROUP |
Clean Energy and NH HOTEL Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Clean Energy and NH HOTEL
The main advantage of trading using opposite Clean Energy and NH HOTEL positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Clean Energy position performs unexpectedly, NH HOTEL 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 NH HOTEL will offset losses from the drop in NH HOTEL'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 |
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 Portfolio Center module to all portfolio management and optimization tools to improve performance of your portfolios.
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