Correlation Between Enersys and FuelCell Energy
Can any of the company-specific risk be diversified away by investing in both Enersys 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 Enersys and FuelCell Energy into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Enersys and FuelCell Energy, you can compare the effects of market volatilities on Enersys 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 Enersys with a short position of FuelCell Energy. Check out your portfolio center. Please also check ongoing floating volatility patterns of Enersys and FuelCell Energy.
Diversification Opportunities for Enersys and FuelCell Energy
0.22 | Correlation Coefficient |
Modest diversification
The 3 months correlation between Enersys and FuelCell is 0.22. Overlapping area represents the amount of risk that can be diversified away by holding Enersys and FuelCell Energy in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on FuelCell Energy and Enersys 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 Enersys 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 Enersys i.e., Enersys and FuelCell Energy go up and down completely randomly.
Pair Corralation between Enersys and FuelCell Energy
Considering the 90-day investment horizon Enersys is expected to under-perform the FuelCell Energy. But the stock apears to be less risky and, when comparing its historical volatility, Enersys is 6.19 times less risky than FuelCell Energy. The stock trades about -0.03 of its potential returns per unit of risk. The FuelCell Energy is currently generating about 0.04 of returns per unit of risk over similar time horizon. If you would invest 1,101 in FuelCell Energy on August 28, 2024 and sell it today you would lose (57.00) from holding FuelCell Energy or give up 5.18% of portfolio value over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Very Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
Enersys vs. FuelCell Energy
Performance |
| Timeline |
| Enersys |
| FuelCell Energy |
Enersys and FuelCell Energy Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Enersys and FuelCell Energy
The main advantage of trading using opposite Enersys and FuelCell Energy positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Enersys 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.| Enersys vs. Advanced Energy Industries | Enersys vs. Hubbell | Enersys vs. Acuity Brands | Enersys vs. Kimball Electronics |
| FuelCell Energy vs. Bloom Energy Corp | FuelCell Energy vs. Eos Energy Enterprises | FuelCell Energy vs. Sunrise New Energy | FuelCell Energy vs. GrafTech International |
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 ETFs module to find actively traded Exchange Traded Funds (ETF) from around the world.
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