Correlation Between FuelCell Energy and DG Innovate
Can any of the company-specific risk be diversified away by investing in both FuelCell Energy and DG Innovate 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 FuelCell Energy and DG Innovate into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between FuelCell Energy and DG Innovate PLC, you can compare the effects of market volatilities on FuelCell Energy and DG Innovate 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 FuelCell Energy with a short position of DG Innovate. Check out your portfolio center. Please also check ongoing floating volatility patterns of FuelCell Energy and DG Innovate.
Diversification Opportunities for FuelCell Energy and DG Innovate
0.06 | Correlation Coefficient |
Significant diversification
The 3 months correlation between FuelCell and DGI is 0.06. Overlapping area represents the amount of risk that can be diversified away by holding FuelCell Energy and DG Innovate PLC in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on DG Innovate PLC and FuelCell 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 FuelCell Energy are associated (or correlated) with DG Innovate. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of DG Innovate PLC has no effect on the direction of FuelCell Energy i.e., FuelCell Energy and DG Innovate go up and down completely randomly.
Pair Corralation between FuelCell Energy and DG Innovate
Assuming the 90 days trading horizon FuelCell Energy is expected to generate 12.47 times more return on investment than DG Innovate. However, FuelCell Energy is 12.47 times more volatile than DG Innovate PLC. It trades about 0.11 of its potential returns per unit of risk. DG Innovate PLC is currently generating about 0.02 per unit of risk. If you would invest 9,546 in FuelCell Energy on August 29, 2024 and sell it today you would lose (8,555) from holding FuelCell Energy or give up 89.62% of portfolio value over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Insignificant |
| Accuracy | 99.4% |
| Values | Daily Returns |
FuelCell Energy vs. DG Innovate PLC
Performance |
| Timeline |
| FuelCell Energy |
| DG Innovate PLC |
FuelCell Energy and DG Innovate Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with FuelCell Energy and DG Innovate
The main advantage of trading using opposite FuelCell Energy and DG Innovate positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if FuelCell Energy position performs unexpectedly, DG Innovate 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 DG Innovate will offset losses from the drop in DG Innovate's long position.| FuelCell Energy vs. InterContinental Hotels Group | FuelCell Energy vs. Alfa Financial Software | FuelCell Energy vs. PPHE Hotel Group | FuelCell Energy vs. Iron Mountain |
| DG Innovate vs. Foresight Environmental Infrastructure | DG Innovate vs. Iron Mountain | DG Innovate vs. Seche Environnement SA | DG Innovate vs. Spirent Communications plc |
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 Competition Analyzer module to analyze and compare many basic indicators for a group of related or unrelated entities.
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