Correlation Between CLEAN ENERGY and Grupo México

Can any of the company-specific risk be diversified away by investing in both CLEAN ENERGY and Grupo México 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 Grupo México 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 Grupo Mxico SAB, you can compare the effects of market volatilities on CLEAN ENERGY and Grupo México 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 Grupo México. Check out your portfolio center. Please also check ongoing floating volatility patterns of CLEAN ENERGY and Grupo México.

Diversification Opportunities for CLEAN ENERGY and Grupo México

-0.06

Correlation Coefficient

CLEAN ENERGY  Grupo México

Good diversification

The 3 months correlation between CLEAN and Grupo is -0.06. Overlapping area represents the amount of risk that can be diversified away by holding CLEAN ENERGY FUELS and Grupo Mxico SAB in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Grupo Mxico SAB 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 Grupo México. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Grupo Mxico SAB has no effect on the direction of CLEAN ENERGY i.e., CLEAN ENERGY and Grupo México go up and down completely randomly.

Pair Corralation between CLEAN ENERGY and Grupo México

Assuming the 90 days trading horizon CLEAN ENERGY FUELS is expected to generate 1.2 times more return on investment than Grupo México. However, CLEAN ENERGY is 1.2 times more volatile than Grupo Mxico SAB. It trades about -0.07 of its potential returns per unit of risk. Grupo Mxico SAB is currently generating about -0.27 per unit of risk. If you would invest  260.00  in CLEAN ENERGY FUELS on October 8, 2024 and sell it today you would lose (7.00) from holding CLEAN ENERGY FUELS or give up 2.69% of portfolio value over 90 days.

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

CLEAN ENERGY FUELS  vs.  Grupo Mxico SAB

CLEAN ENERGY FUELS

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days CLEAN ENERGY FUELS has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of rather sound basic indicators, CLEAN ENERGY is not utilizing all of its potentials. The newest stock price tumult, may contribute to shorter-term losses for the shareholders.

Grupo Mxico SAB

Risk-Adjusted Performance

7 of 100

OK

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

Pair Trading with CLEAN ENERGY and Grupo México

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

The idea behind CLEAN ENERGY FUELS and Grupo Mxico SAB 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 Idea Breakdown module to analyze constituents of all Macroaxis ideas. Macroaxis investment ideas are predefined, sector-focused investing themes.