Correlation Between Clean Energy and Alon USA

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

Diversification Opportunities for Clean Energy and Alon USA

0.0

Correlation Coefficient

Clean Energy  Alon USA

Pay attention - limited upside

The 3 months correlation between Clean and Alon is 0.0. Overlapping area represents the amount of risk that can be diversified away by holding Clean Energy Fuels and Alon USA Partners in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Alon USA Partners 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 Alon USA. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Alon USA Partners has no effect on the direction of Clean Energy i.e., Clean Energy and Alon USA go up and down completely randomly.

Pair Corralation between Clean Energy and Alon USA

If you would invest (100.00) in Alon USA Partners on January 24, 2024 and sell it today you would earn a total of  100.00  from holding Alon USA Partners or generate -100.0% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Flat
Strength	Insignificant
Accuracy	0.0%
Values	Daily Returns

Clean Energy Fuels  vs.  Alon USA Partners

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. In spite of conflicting performance in the last few months, the Stock's basic indicators remain rather sound which may send shares a bit higher in May 2024. The latest tumult may also be a sign of longer-term up-swing for the firm shareholders.

Alon USA Partners

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Alon USA Partners has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of fairly stable fundamental indicators, Alon USA is not utilizing all of its potentials. The current stock price fuss, may contribute to near-short-term losses for the sophisticated investors.

Pair Trading with Clean Energy and Alon USA

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

The idea behind Clean Energy Fuels and Alon USA Partners 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 USA ETFs module to find actively traded Exchange Traded Funds (ETF) in USA.