Correlation Between Clean Energy and Graco

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

By analyzing existing cross correlation between Clean Energy Technologies, and Graco Inc, you can compare the effects of market volatilities on Clean Energy and Graco 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 Graco. Check out your portfolio center. Please also check ongoing floating volatility patterns of Clean Energy and Graco.

Diversification Opportunities for Clean Energy and Graco

-0.14

Correlation Coefficient

Clean Energy  Graco

Good diversification

The 3 months correlation between Clean and Graco is -0.14. Overlapping area represents the amount of risk that can be diversified away by holding Clean Energy Technologies, and Graco Inc in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Graco Inc 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 Technologies, are associated (or correlated) with Graco. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Graco Inc has no effect on the direction of Clean Energy i.e., Clean Energy and Graco go up and down completely randomly.

Pair Corralation between Clean Energy and Graco

Given the investment horizon of 90 days Clean Energy Technologies, is expected to generate 6.67 times more return on investment than Graco. However, Clean Energy is 6.67 times more volatile than Graco Inc. It trades about 0.01 of its potential returns per unit of risk. Graco Inc is currently generating about 0.02 per unit of risk. If you would invest  59.00  in Clean Energy Technologies, on December 28, 2024 and sell it today you would lose (8.00) from holding Clean Energy Technologies, or give up 13.56% of portfolio value over 90 days.

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

Clean Energy Technologies,  vs.  Graco Inc

Clean Energy Technol

Risk-Adjusted Performance

Weak

Over the last 90 days Clean Energy Technologies, has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of fairly strong basic indicators, Clean Energy is not utilizing all of its potentials. The latest stock price disturbance, may contribute to short-term losses for the investors.

Graco Inc

Risk-Adjusted Performance

Weak

Compared to the overall equity markets, risk-adjusted returns on investments in Graco Inc are ranked lower than 1 (%) of all global equities and portfolios over the last 90 days. Despite nearly stable technical and fundamental indicators, Graco is not utilizing all of its potentials. The latest stock price disturbance, may contribute to mid-run losses for the stockholders.

Pair Trading with Clean Energy and Graco

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

The idea behind Clean Energy Technologies, and Graco Inc 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.

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 Piotroski F Score module to get Piotroski F Score based on the binary analysis strategy of nine different fundamentals.