Correlation Between Clean Energy and Resmed
Can any of the company-specific risk be diversified away by investing in both Clean Energy and Resmed 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 Resmed 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 Resmed Inc DRC, you can compare the effects of market volatilities on Clean Energy and Resmed 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 Resmed. Check out your portfolio center. Please also check ongoing floating volatility patterns of Clean Energy and Resmed.
Diversification Opportunities for Clean Energy and Resmed
0.25 | Correlation Coefficient |
Modest diversification
The 3 months correlation between Clean and Resmed is 0.25. Overlapping area represents the amount of risk that can be diversified away by holding Clean Energy Fuels and Resmed Inc DRC in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Resmed Inc DRC 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 Resmed. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Resmed Inc DRC has no effect on the direction of Clean Energy i.e., Clean Energy and Resmed go up and down completely randomly.
Pair Corralation between Clean Energy and Resmed
Assuming the 90 days horizon Clean Energy Fuels is expected to generate 3.49 times more return on investment than Resmed. However, Clean Energy is 3.49 times more volatile than Resmed Inc DRC. It trades about 0.12 of its potential returns per unit of risk. Resmed Inc DRC is currently generating about 0.26 per unit of risk. If you would invest 262.00 in Clean Energy Fuels on September 3, 2024 and sell it today you would earn a total of 29.00 from holding Clean Energy Fuels or generate 11.07% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Very Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
Clean Energy Fuels vs. Resmed Inc DRC
Performance |
| Timeline |
| Clean Energy Fuels |
| Resmed Inc DRC |
Clean Energy and Resmed Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Clean Energy and Resmed
The main advantage of trading using opposite Clean Energy and Resmed positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Clean Energy position performs unexpectedly, Resmed 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 Resmed will offset losses from the drop in Resmed's long position.| Clean Energy vs. Marathon Petroleum Corp | Clean Energy vs. Neste Oyj | Clean Energy vs. ENEOS Holdings | Clean Energy vs. PTT OILRETBUS FOR BA10 |
| Resmed vs. ADRIATIC METALS LS 013355 | Resmed vs. Strategic Investments AS | Resmed vs. Clean Energy Fuels | Resmed vs. Cleanaway Waste Management |
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 Performance Analysis module to check effects of mean-variance optimization against your current asset allocation.
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