Correlation Between CLEAN ENERGY and XTANT MEDICAL

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

Diversification Opportunities for CLEAN ENERGY and XTANT MEDICAL

-0.06

Correlation Coefficient

CLEAN ENERGY  XTANT MEDICAL

Good diversification

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

Pair Corralation between CLEAN ENERGY and XTANT MEDICAL

Assuming the 90 days trading horizon CLEAN ENERGY FUELS is expected to under-perform the XTANT MEDICAL. But the stock apears to be less risky and, when comparing its historical volatility, CLEAN ENERGY FUELS is 1.83 times less risky than XTANT MEDICAL. The stock trades about -0.1 of its potential returns per unit of risk. The XTANT MEDICAL HLDGS is currently generating about 0.12 of returns per unit of risk over similar time horizon. If you would invest  36.00  in XTANT MEDICAL HLDGS on October 7, 2024 and sell it today you would earn a total of  8.00  from holding XTANT MEDICAL HLDGS or generate 22.22% return on investment over 90 days.

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

CLEAN ENERGY FUELS  vs.  XTANT MEDICAL HLDGS

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 latest stock price tumult, may contribute to shorter-term losses for the shareholders.

XTANT MEDICAL HLDGS

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days XTANT MEDICAL HLDGS has generated negative risk-adjusted returns adding no value to investors with long positions. Despite latest fragile performance, the Stock's basic indicators remain stable and the current disturbance on Wall Street may also be a sign of long-run gains for the company stockholders.

Pair Trading with CLEAN ENERGY and XTANT MEDICAL

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

The idea behind CLEAN ENERGY FUELS and XTANT MEDICAL HLDGS 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 Content Syndication module to quickly integrate customizable finance content to your own investment portal.