Correlation Between Clean Energy and Gartner

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

Diversification Opportunities for Clean Energy and Gartner

0.6
  Correlation Coefficient

Poor diversification

The 3 months correlation between Clean and Gartner is 0.6. Overlapping area represents the amount of risk that can be diversified away by holding Clean Energy Fuels and Gartner in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Gartner 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 Gartner. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Gartner has no effect on the direction of Clean Energy i.e., Clean Energy and Gartner go up and down completely randomly.

Pair Corralation between Clean Energy and Gartner

Given the investment horizon of 90 days Clean Energy Fuels is expected to under-perform the Gartner. In addition to that, Clean Energy is 1.44 times more volatile than Gartner. It trades about -0.1 of its total potential returns per unit of risk. Gartner is currently generating about 0.29 per unit of volatility. If you would invest  30,192  in Gartner on August 30, 2022 and sell it today you would earn a total of  4,219  from holding Gartner or generate 13.97% return on investment over 90 days.
Time Period3 Months [change]
DirectionMoves Together 
StrengthSignificant
Accuracy100.0%
ValuesDaily Returns

Clean Energy Fuels  vs.  Gartner

 Performance (%) 
       Timeline  
Clean Energy Fuels 
Clean Performance
0 of 100
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 current stock price tumult, may contribute to shorter-term losses for the shareholders.

Clean Price Channel

Gartner 
Gartner Performance
10 of 100
Compared to the overall equity markets, risk-adjusted returns on investments in Gartner are ranked lower than 10 (%) of all global equities and portfolios over the last 90 days. In spite of comparatively sluggish basic indicators, Gartner unveiled solid returns over the last few months and may actually be approaching a breakup point.

Gartner Price Channel

Clean Energy and Gartner Volatility Contrast

   Predicted Return Density   
       Returns  

Pair Trading with Clean Energy and Gartner

The main advantage of trading using opposite Clean Energy and Gartner positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Clean Energy position performs unexpectedly, Gartner 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 Gartner will offset losses from the drop in Gartner's long position.
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The idea behind Clean Energy Fuels and Gartner 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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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 Analyst Recommendations module to analyst recommendations and target price estimates broken down by several categories.

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