Correlation Between Carnegie Clean and Clean Energy

Can any of the company-specific risk be diversified away by investing in both Carnegie Clean and Clean Energy 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 Carnegie Clean and Clean Energy into the same portfolio, which is an essential part of the fundamental portfolio management process.

By analyzing existing cross correlation between Carnegie Clean Energy and Clean Energy Fuels, you can compare the effects of market volatilities on Carnegie Clean and Clean Energy 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 Carnegie Clean with a short position of Clean Energy. Check out your portfolio center. Please also check ongoing floating volatility patterns of Carnegie Clean and Clean Energy.

Diversification Opportunities for Carnegie Clean and Clean Energy

0.63

Correlation Coefficient

Carnegie Clean  Clean Energy

Poor diversification

The 3 months correlation between Carnegie and Clean is 0.63. Overlapping area represents the amount of risk that can be diversified away by holding Carnegie Clean Energy and Clean Energy Fuels in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Clean Energy Fuels and Carnegie Clean 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 Carnegie Clean Energy are associated (or correlated) with Clean Energy. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Clean Energy Fuels has no effect on the direction of Carnegie Clean i.e., Carnegie Clean and Clean Energy go up and down completely randomly.

Pair Corralation between Carnegie Clean and Clean Energy

Assuming the 90 days trading horizon Carnegie Clean Energy is expected to generate 1.12 times more return on investment than Clean Energy. However, Carnegie Clean is 1.12 times more volatile than Clean Energy Fuels. It trades about 0.17 of its potential returns per unit of risk. Clean Energy Fuels is currently generating about 0.15 per unit of risk. If you would invest  1.70  in Carnegie Clean Energy on April 21, 2025 and sell it today you would earn a total of  1.02  from holding Carnegie Clean Energy or generate 60.0% return on investment over 90 days.

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

Carnegie Clean Energy  vs.  Clean Energy Fuels

Carnegie Clean Energy

Risk-Adjusted Performance

Good

Compared to the overall equity markets, risk-adjusted returns on investments in Carnegie Clean Energy are ranked lower than 13 (%) of all global equities and portfolios over the last 90 days. Despite nearly uncertain primary indicators, Carnegie Clean reported solid returns over the last few months and may actually be approaching a breakup point.

Clean Energy Fuels

Risk-Adjusted Performance

Good

Compared to the overall equity markets, risk-adjusted returns on investments in Clean Energy Fuels are ranked lower than 11 (%) of all global equities and portfolios over the last 90 days. Despite nearly fragile basic indicators, Clean Energy reported solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with Carnegie Clean and Clean Energy

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

The idea behind Carnegie Clean Energy and Clean Energy Fuels 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 Watchlist Optimization module to optimize watchlists to build efficient portfolios or rebalance existing positions based on the mean-variance optimization algorithm.