Correlation Between Clearway Energy and First National

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

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

Diversification Opportunities for Clearway Energy and First National

0.59

Correlation Coefficient

Clearway Energy  First National

Very weak diversification

The 3 months correlation between Clearway and First is 0.59. Overlapping area represents the amount of risk that can be diversified away by holding Clearway Energy Class and First National Energy in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on First National Energy and Clearway 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 Clearway Energy Class are associated (or correlated) with First National. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of First National Energy has no effect on the direction of Clearway Energy i.e., Clearway Energy and First National go up and down completely randomly.

Pair Corralation between Clearway Energy and First National

Given the investment horizon of 90 days Clearway Energy Class is expected to generate 0.13 times more return on investment than First National. However, Clearway Energy Class is 7.96 times less risky than First National. It trades about 0.05 of its potential returns per unit of risk. First National Energy is currently generating about 0.0 per unit of risk. If you would invest  2,808  in Clearway Energy Class on September 3, 2024 and sell it today you would earn a total of  141.00  from holding Clearway Energy Class or generate 5.02% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Together
Strength	Weak
Accuracy	98.46%
Values	Daily Returns

Clearway Energy Class  vs.  First National Energy

Clearway Energy Class

Risk-Adjusted Performance

3 of 100

Insignificant

Compared to the overall equity markets, risk-adjusted returns on investments in Clearway Energy Class are ranked lower than 3 (%) of all global equities and portfolios over the last 90 days. In spite of very healthy technical and fundamental indicators, Clearway Energy is not utilizing all of its potentials. The latest stock price disarray, may contribute to short-term losses for the investors.

First National Energy

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days First National Energy has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of rather sound technical and fundamental indicators, First National is not utilizing all of its potentials. The latest stock price tumult, may contribute to shorter-term losses for the shareholders.

Pair Trading with Clearway Energy and First National

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

The idea behind Clearway Energy Class and First National 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 Portfolio Center module to all portfolio management and optimization tools to improve performance of your portfolios.