Correlation Between Clean Energy and GOODYEAR T

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

Diversification Opportunities for Clean Energy and GOODYEAR T

0.43

Correlation Coefficient

Clean Energy  GOODYEAR T

Very weak diversification

The 3 months correlation between Clean and GOODYEAR is 0.43. Overlapping area represents the amount of risk that can be diversified away by holding Clean Energy Fuels and GOODYEAR T RUBBER in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on GOODYEAR T RUBBER 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 GOODYEAR T. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of GOODYEAR T RUBBER has no effect on the direction of Clean Energy i.e., Clean Energy and GOODYEAR T go up and down completely randomly.

Pair Corralation between Clean Energy and GOODYEAR T

Assuming the 90 days horizon Clean Energy Fuels is expected to under-perform the GOODYEAR T. In addition to that, Clean Energy is 1.38 times more volatile than GOODYEAR T RUBBER. It trades about -0.02 of its total potential returns per unit of risk. GOODYEAR T RUBBER is currently generating about 0.0 per unit of volatility. If you would invest  1,026  in GOODYEAR T RUBBER on October 3, 2024 and sell it today you would lose (194.00) from holding GOODYEAR T RUBBER or give up 18.91% of portfolio value over 90 days.

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

Clean Energy Fuels  vs.  GOODYEAR T RUBBER

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. Despite nearly stable basic indicators, Clean Energy is not utilizing all of its potentials. The current stock price disturbance, may contribute to mid-run losses for the stockholders.

GOODYEAR T RUBBER

Risk-Adjusted Performance

6 of 100

Modest

Compared to the overall equity markets, risk-adjusted returns on investments in GOODYEAR T RUBBER are ranked lower than 6 (%) of all global equities and portfolios over the last 90 days. In spite of comparatively uncertain basic indicators, GOODYEAR T unveiled solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with Clean Energy and GOODYEAR T

The main advantage of trading using opposite Clean Energy and GOODYEAR T positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Clean Energy position performs unexpectedly, GOODYEAR T 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 GOODYEAR T will offset losses from the drop in GOODYEAR T's long position.

The idea behind Clean Energy Fuels and GOODYEAR T RUBBER 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 Bollinger Bands module to use Bollinger Bands indicator to analyze target price for a given investing horizon.