Correlation Between MACOM Technology and Clean Energy

Can any of the company-specific risk be diversified away by investing in both MACOM Technology and Clean Energy 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 MACOM Technology and Clean Energy into the same portfolio, which is an essential part of the fundamental portfolio management process.

By analyzing existing cross correlation between MACOM Technology Solutions and Clean Energy Fuels, you can compare the effects of market volatilities on MACOM Technology and Clean Energy 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 MACOM Technology with a short position of Clean Energy. Check out your portfolio center. Please also check ongoing floating volatility patterns of MACOM Technology and Clean Energy.

Diversification Opportunities for MACOM Technology and Clean Energy

0.69

Correlation Coefficient

MACOM Technology  Clean Energy

Poor diversification

The 3 months correlation between MACOM and Clean is 0.69. Overlapping area represents the amount of risk that can be diversified away by holding MACOM Technology Solutions and Clean Energy Fuels in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Clean Energy Fuels and MACOM Technology 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 MACOM Technology Solutions are associated (or correlated) with Clean Energy. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Clean Energy Fuels has no effect on the direction of MACOM Technology i.e., MACOM Technology and Clean Energy go up and down completely randomly.

Pair Corralation between MACOM Technology and Clean Energy

Assuming the 90 days horizon MACOM Technology Solutions is expected to generate 0.65 times more return on investment than Clean Energy. However, MACOM Technology Solutions is 1.53 times less risky than Clean Energy. It trades about -0.11 of its potential returns per unit of risk. Clean Energy Fuels is currently generating about -0.12 per unit of risk. If you would invest  12,800  in MACOM Technology Solutions on December 20, 2024 and sell it today you would lose (2,700) from holding MACOM Technology Solutions or give up 21.09% of portfolio value over 90 days.

Time Period	3 Months [change]
Direction	Moves Together
Strength	Significant
Accuracy	100.0%
Values	Daily Returns

MACOM Technology Solutions  vs.  Clean Energy Fuels

MACOM Technology Sol

Risk-Adjusted Performance

Very Weak

Over the last 90 days MACOM Technology Solutions has generated negative risk-adjusted returns adding no value to investors with long positions. Despite uncertain performance in the last few months, the Stock's basic indicators remain nearly stable which may send shares a bit higher in April 2025. The current disturbance may also be a sign of long-run up-swing for the company stockholders.

Clean Energy Fuels

Risk-Adjusted Performance

Very Weak

Over the last 90 days Clean Energy Fuels has generated negative risk-adjusted returns adding no value to investors with long positions. Despite fragile performance in the last few months, the Stock's basic indicators remain nearly stable which may send shares a bit higher in April 2025. The current disturbance may also be a sign of long-run up-swing for the company stockholders.

Pair Trading with MACOM Technology and Clean Energy

The main advantage of trading using opposite MACOM Technology and Clean Energy positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if MACOM Technology position performs unexpectedly, Clean Energy 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 Clean Energy will offset losses from the drop in Clean Energy's long position.

The idea behind MACOM Technology Solutions and Clean Energy Fuels 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.

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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 Stock Tickers module to use high-impact, comprehensive, and customizable stock tickers that can be easily integrated to any websites.