Correlation Between Bloom Energy and Varta AG
Can any of the company-specific risk be diversified away by investing in both Bloom Energy and Varta AG 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 Bloom Energy and Varta AG into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Bloom Energy and Varta AG, you can compare the effects of market volatilities on Bloom Energy and Varta AG 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 Bloom Energy with a short position of Varta AG. Check out your portfolio center. Please also check ongoing floating volatility patterns of Bloom Energy and Varta AG.
Diversification Opportunities for Bloom Energy and Varta AG
-0.02 | Correlation Coefficient |
Good diversification
The 3 months correlation between Bloom and Varta is -0.02. Overlapping area represents the amount of risk that can be diversified away by holding Bloom Energy and Varta AG in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Varta AG and Bloom 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 Bloom Energy are associated (or correlated) with Varta AG. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Varta AG has no effect on the direction of Bloom Energy i.e., Bloom Energy and Varta AG go up and down completely randomly.
Pair Corralation between Bloom Energy and Varta AG
Assuming the 90 days horizon Bloom Energy is expected to generate 1.48 times more return on investment than Varta AG. However, Bloom Energy is 1.48 times more volatile than Varta AG. It trades about 0.33 of its potential returns per unit of risk. Varta AG is currently generating about -0.06 per unit of risk. If you would invest 866.00 in Bloom Energy on August 25, 2024 and sell it today you would earn a total of 1,634 from holding Bloom Energy or generate 188.68% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Insignificant |
| Accuracy | 100.0% |
| Values | Daily Returns |
Bloom Energy vs. Varta AG
Performance |
| Timeline |
| Bloom Energy |
| Varta AG |
Bloom Energy and Varta AG Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Bloom Energy and Varta AG
The main advantage of trading using opposite Bloom Energy and Varta AG positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Bloom Energy position performs unexpectedly, Varta AG 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 Varta AG will offset losses from the drop in Varta AG's long position.The idea behind Bloom Energy and Varta AG 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.| Varta AG vs. REVO INSURANCE SPA | Varta AG vs. ZURICH INSURANCE GROUP | Varta AG vs. The Hanover Insurance | Varta AG vs. CapitaLand Investment Limited |
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 Price Ceiling Movement module to calculate and plot Price Ceiling Movement for different equity instruments.
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