Correlation Between Clean Energy and PENINSULA ENERG

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

Diversification Opportunities for Clean Energy and PENINSULA ENERG

0.04

Correlation Coefficient

Clean Energy  PENINSULA ENERG

Significant diversification

The 3 months correlation between Clean and PENINSULA is 0.04. Overlapping area represents the amount of risk that can be diversified away by holding Clean Energy Fuels and PENINSULA ENERG in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on PENINSULA ENERG 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 PENINSULA ENERG. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of PENINSULA ENERG has no effect on the direction of Clean Energy i.e., Clean Energy and PENINSULA ENERG go up and down completely randomly.

Pair Corralation between Clean Energy and PENINSULA ENERG

Assuming the 90 days horizon Clean Energy Fuels is expected to under-perform the PENINSULA ENERG. But the stock apears to be less risky and, when comparing its historical volatility, Clean Energy Fuels is 11.82 times less risky than PENINSULA ENERG. The stock trades about -0.02 of its potential returns per unit of risk. The PENINSULA ENERG is currently generating about 0.04 of returns per unit of risk over similar time horizon. If you would invest  185.00  in PENINSULA ENERG on October 4, 2024 and sell it today you would lose (106.00) from holding PENINSULA ENERG or give up 57.3% of portfolio value over 90 days.

Time Period	3 Months [change]
Direction	Moves Together
Strength	Insignificant
Accuracy	99.8%
Values	Daily Returns

Clean Energy Fuels  vs.  PENINSULA ENERG

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 latest stock price disturbance, may contribute to mid-run losses for the stockholders.

PENINSULA ENERG

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days PENINSULA ENERG has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of uncertain performance in the last few months, the Stock's basic indicators remain comparatively stable which may send shares a bit higher in February 2025. The newest uproar may also be a sign of mid-term up-swing for the firm private investors.

Pair Trading with Clean Energy and PENINSULA ENERG

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

The idea behind Clean Energy Fuels and PENINSULA ENERG 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 Optimizer module to use advanced portfolio builder with pre-computed micro ideas to build optimal portfolio .