Correlation Between Clean Energy and UNITED UTILITIES
Can any of the company-specific risk be diversified away by investing in both Clean Energy and UNITED UTILITIES 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 UNITED UTILITIES 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 UNITED UTILITIES GR, you can compare the effects of market volatilities on Clean Energy and UNITED UTILITIES 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 UNITED UTILITIES. Check out your portfolio center. Please also check ongoing floating volatility patterns of Clean Energy and UNITED UTILITIES.
Diversification Opportunities for Clean Energy and UNITED UTILITIES
-0.37 | Correlation Coefficient |
Very good diversification
The 3 months correlation between Clean and UNITED is -0.37. Overlapping area represents the amount of risk that can be diversified away by holding Clean Energy Fuels and UNITED UTILITIES GR in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on UNITED UTILITIES 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 UNITED UTILITIES. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of UNITED UTILITIES has no effect on the direction of Clean Energy i.e., Clean Energy and UNITED UTILITIES go up and down completely randomly.
Pair Corralation between Clean Energy and UNITED UTILITIES
Assuming the 90 days horizon Clean Energy Fuels is expected to under-perform the UNITED UTILITIES. In addition to that, Clean Energy is 2.97 times more volatile than UNITED UTILITIES GR. It trades about -0.05 of its total potential returns per unit of risk. UNITED UTILITIES GR is currently generating about 0.22 per unit of volatility. If you would invest 1,260 in UNITED UTILITIES GR on August 28, 2024 and sell it today you would earn a total of 90.00 from holding UNITED UTILITIES GR or generate 7.14% 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. UNITED UTILITIES GR
Performance |
| Timeline |
| Clean Energy Fuels |
| UNITED UTILITIES |
Clean Energy and UNITED UTILITIES Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Clean Energy and UNITED UTILITIES
The main advantage of trading using opposite Clean Energy and UNITED UTILITIES positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Clean Energy position performs unexpectedly, UNITED UTILITIES 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 UNITED UTILITIES will offset losses from the drop in UNITED UTILITIES's long position.| Clean Energy vs. Superior Plus Corp | Clean Energy vs. NMI Holdings | Clean Energy vs. Origin Agritech | Clean Energy vs. SIVERS SEMICONDUCTORS AB |
| UNITED UTILITIES vs. JD SPORTS FASH | UNITED UTILITIES vs. Federal Agricultural Mortgage | UNITED UTILITIES vs. Granite Construction | UNITED UTILITIES vs. USWE SPORTS AB |
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 Idea Optimizer module to use advanced portfolio builder with pre-computed micro ideas to build optimal portfolio .
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