Correlation Between Energy and Greenlane Renewables

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

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

Diversification Opportunities for Energy and Greenlane Renewables

-0.39

Correlation Coefficient

Energy  Greenlane Renewables

Very good diversification

The 3 months correlation between Energy and Greenlane is -0.39. Overlapping area represents the amount of risk that can be diversified away by holding Energy and Water and Greenlane Renewables in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Greenlane Renewables and 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 Energy and Water are associated (or correlated) with Greenlane Renewables. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Greenlane Renewables has no effect on the direction of Energy i.e., Energy and Greenlane Renewables go up and down completely randomly.

Pair Corralation between Energy and Greenlane Renewables

Given the investment horizon of 90 days Energy and Water is expected to under-perform the Greenlane Renewables. In addition to that, Energy is 1.39 times more volatile than Greenlane Renewables. It trades about -0.17 of its total potential returns per unit of risk. Greenlane Renewables is currently generating about 0.1 per unit of volatility. If you would invest  5.00  in Greenlane Renewables on September 13, 2024 and sell it today you would earn a total of  1.93  from holding Greenlane Renewables or generate 38.6% return on investment over 90 days.

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

Energy and Water  vs.  Greenlane Renewables

Energy and Water

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Energy and Water has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of fragile performance in the last few months, the Stock's basic indicators remain rather sound which may send shares a bit higher in January 2025. The latest tumult may also be a sign of longer-term up-swing for the firm shareholders.

Greenlane Renewables

Risk-Adjusted Performance

7 of 100

OK

Compared to the overall equity markets, risk-adjusted returns on investments in Greenlane Renewables are ranked lower than 7 (%) of all global equities and portfolios over the last 90 days. Despite nearly uncertain basic indicators, Greenlane Renewables reported solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with Energy and Greenlane Renewables

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

The idea behind Energy and Water and Greenlane Renewables 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 Cryptocurrency Center module to build and monitor diversified portfolio of extremely risky digital assets and cryptocurrency.