Correlation Between Clean Energy and Virtus Investment
Can any of the company-specific risk be diversified away by investing in both Clean Energy and Virtus Investment 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 Virtus Investment 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 Virtus Investment Partners, you can compare the effects of market volatilities on Clean Energy and Virtus Investment 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 Virtus Investment. Check out your portfolio center. Please also check ongoing floating volatility patterns of Clean Energy and Virtus Investment.
Diversification Opportunities for Clean Energy and Virtus Investment
0.28 | Correlation Coefficient |
Modest diversification
The 3 months correlation between Clean and Virtus is 0.28. Overlapping area represents the amount of risk that can be diversified away by holding Clean Energy Fuels and Virtus Investment Partners in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Virtus Investment 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 Virtus Investment. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Virtus Investment has no effect on the direction of Clean Energy i.e., Clean Energy and Virtus Investment go up and down completely randomly.
Pair Corralation between Clean Energy and Virtus Investment
Assuming the 90 days horizon Clean Energy Fuels is expected to under-perform the Virtus Investment. In addition to that, Clean Energy is 1.99 times more volatile than Virtus Investment Partners. It trades about -0.01 of its total potential returns per unit of risk. Virtus Investment Partners is currently generating about 0.04 per unit of volatility. If you would invest 16,866 in Virtus Investment Partners on September 5, 2024 and sell it today you would earn a total of 6,534 from holding Virtus Investment Partners or generate 38.74% 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. Virtus Investment Partners
Performance |
| Timeline |
| Clean Energy Fuels |
| Virtus Investment |
Clean Energy and Virtus Investment Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Clean Energy and Virtus Investment
The main advantage of trading using opposite Clean Energy and Virtus Investment positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Clean Energy position performs unexpectedly, Virtus Investment 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 Virtus Investment will offset losses from the drop in Virtus Investment's long position.The idea behind Clean Energy Fuels and Virtus Investment Partners pairs trading is to make the combined position market-neutral, meaning the overall market's direction will not affect its win or loss (or potential downside or upside). This can be achieved by designing a pairs trade with two highly correlated stocks or equities that operate in a similar space or sector, making it possible to obtain profits through simple and relatively low-risk investment.| Virtus Investment vs. CVW CLEANTECH INC | Virtus Investment vs. The Trade Desk | Virtus Investment vs. Clean Energy Fuels | Virtus Investment 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 Commodity Directory module to find actively traded commodities issued by global exchanges.
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