Correlation Between Clean Energy and Genco Shipping

Can any of the company-specific risk be diversified away by investing in both Clean Energy and Genco Shipping 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 Genco Shipping 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 Genco Shipping Trading, you can compare the effects of market volatilities on Clean Energy and Genco Shipping 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 Genco Shipping. Check out your portfolio center. Please also check ongoing floating volatility patterns of Clean Energy and Genco Shipping.

Diversification Opportunities for Clean Energy and Genco Shipping

0.17

Correlation Coefficient

Clean Energy  Genco Shipping

Average diversification

The 3 months correlation between Clean and Genco is 0.17. Overlapping area represents the amount of risk that can be diversified away by holding Clean Energy Fuels and Genco Shipping Trading in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Genco Shipping Trading 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 Genco Shipping. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Genco Shipping Trading has no effect on the direction of Clean Energy i.e., Clean Energy and Genco Shipping go up and down completely randomly.

Pair Corralation between Clean Energy and Genco Shipping

Assuming the 90 days horizon Clean Energy Fuels is expected to generate 2.11 times more return on investment than Genco Shipping. However, Clean Energy is 2.11 times more volatile than Genco Shipping Trading. It trades about 0.07 of its potential returns per unit of risk. Genco Shipping Trading is currently generating about 0.03 per unit of risk. If you would invest  266.00  in Clean Energy Fuels on August 31, 2024 and sell it today you would earn a total of  34.00  from holding Clean Energy Fuels or generate 12.78% return on investment over 90 days.

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

Clean Energy Fuels  vs.  Genco Shipping Trading

Clean Energy Fuels

Risk-Adjusted Performance

5 of 100

Insignificant

Compared to the overall equity markets, risk-adjusted returns on investments in Clean Energy Fuels are ranked lower than 5 (%) of all global equities and portfolios over the last 90 days. Despite nearly unsteady basic indicators, Clean Energy reported solid returns over the last few months and may actually be approaching a breakup point.

Genco Shipping Trading

Risk-Adjusted Performance

2 of 100

Weak

Compared to the overall equity markets, risk-adjusted returns on investments in Genco Shipping Trading are ranked lower than 2 (%) of all global equities and portfolios over the last 90 days. Despite nearly stable basic indicators, Genco Shipping is not utilizing all of its potentials. The current stock price disturbance, may contribute to mid-run losses for the stockholders.

Pair Trading with Clean Energy and Genco Shipping

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

The idea behind Clean Energy Fuels and Genco Shipping Trading 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 Stocks Directory module to find actively traded stocks across global markets.