Correlation Between CANON MARKETING and FuelCell Energy

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

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

Diversification Opportunities for CANON MARKETING and FuelCell Energy

0.19

Correlation Coefficient

CANON MARKETING  FuelCell Energy

Average diversification

The 3 months correlation between CANON and FuelCell is 0.19. Overlapping area represents the amount of risk that can be diversified away by holding CANON MARKETING JP and FuelCell Energy in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on FuelCell Energy and CANON MARKETING 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 CANON MARKETING JP are associated (or correlated) with FuelCell Energy. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of FuelCell Energy has no effect on the direction of CANON MARKETING i.e., CANON MARKETING and FuelCell Energy go up and down completely randomly.

Pair Corralation between CANON MARKETING and FuelCell Energy

Assuming the 90 days trading horizon CANON MARKETING JP is expected to generate 0.23 times more return on investment than FuelCell Energy. However, CANON MARKETING JP is 4.28 times less risky than FuelCell Energy. It trades about 0.07 of its potential returns per unit of risk. FuelCell Energy is currently generating about -0.03 per unit of risk. If you would invest  2,060  in CANON MARKETING JP on September 20, 2024 and sell it today you would earn a total of  1,120  from holding CANON MARKETING JP or generate 54.37% return on investment over 90 days.

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

CANON MARKETING JP  vs.  FuelCell Energy

CANON MARKETING JP

Risk-Adjusted Performance

10 of 100

OK

Compared to the overall equity markets, risk-adjusted returns on investments in CANON MARKETING JP are ranked lower than 10 (%) of all global equities and portfolios over the last 90 days. In spite of comparatively fragile forward-looking indicators, CANON MARKETING may actually be approaching a critical reversion point that can send shares even higher in January 2025.

FuelCell Energy

Risk-Adjusted Performance

1 of 100

Weak

Compared to the overall equity markets, risk-adjusted returns on investments in FuelCell Energy are ranked lower than 1 (%) of all global equities and portfolios over the last 90 days. Despite nearly uncertain basic indicators, FuelCell Energy may actually be approaching a critical reversion point that can send shares even higher in January 2025.

Pair Trading with CANON MARKETING and FuelCell Energy

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

The idea behind CANON MARKETING JP and FuelCell Energy 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.