Correlation Between Carnegie Clean and Atlantic Wind

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

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

Diversification Opportunities for Carnegie Clean and Atlantic Wind

0.29

Correlation Coefficient

Carnegie Clean  Atlantic Wind

Modest diversification

The 3 months correlation between Carnegie and Atlantic is 0.29. Overlapping area represents the amount of risk that can be diversified away by holding Carnegie Clean Energy and Atlantic Wind Solar in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Atlantic Wind Solar and Carnegie Clean 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 Carnegie Clean Energy are associated (or correlated) with Atlantic Wind. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Atlantic Wind Solar has no effect on the direction of Carnegie Clean i.e., Carnegie Clean and Atlantic Wind go up and down completely randomly.

Pair Corralation between Carnegie Clean and Atlantic Wind

Assuming the 90 days horizon Carnegie Clean Energy is expected to generate 2.85 times more return on investment than Atlantic Wind. However, Carnegie Clean is 2.85 times more volatile than Atlantic Wind Solar. It trades about 0.11 of its potential returns per unit of risk. Atlantic Wind Solar is currently generating about 0.16 per unit of risk. If you would invest  2.07  in Carnegie Clean Energy on December 30, 2024 and sell it today you would earn a total of  0.48  from holding Carnegie Clean Energy or generate 23.19% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Together
Strength	Very Weak
Accuracy	98.41%
Values	Daily Returns

Carnegie Clean Energy  vs.  Atlantic Wind Solar

Carnegie Clean Energy

Risk-Adjusted Performance

OK

Compared to the overall equity markets, risk-adjusted returns on investments in Carnegie Clean Energy are ranked lower than 8 (%) of all global equities and portfolios over the last 90 days. Despite nearly fragile basic indicators, Carnegie Clean reported solid returns over the last few months and may actually be approaching a breakup point.

Atlantic Wind Solar

Risk-Adjusted Performance

Good

Compared to the overall equity markets, risk-adjusted returns on investments in Atlantic Wind Solar are ranked lower than 12 (%) of all global equities and portfolios over the last 90 days. Despite quite inconsistent basic indicators, Atlantic Wind disclosed solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with Carnegie Clean and Atlantic Wind

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

The idea behind Carnegie Clean Energy and Atlantic Wind Solar 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 Pattern Recognition module to use different Pattern Recognition models to time the market across multiple global exchanges.