Correlation Between FuelCell Energy and ESS Tech
Can any of the company-specific risk be diversified away by investing in both FuelCell Energy and ESS Tech 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 ESS Tech into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between FuelCell Energy and ESS Tech, you can compare the effects of market volatilities on FuelCell Energy and ESS Tech 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 ESS Tech. Check out your portfolio center. Please also check ongoing floating volatility patterns of FuelCell Energy and ESS Tech.
Diversification Opportunities for FuelCell Energy and ESS Tech
-0.35 | Correlation Coefficient |
Very good diversification
The 3 months correlation between FuelCell and ESS is -0.35. Overlapping area represents the amount of risk that can be diversified away by holding FuelCell Energy and ESS Tech in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on ESS Tech 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 ESS Tech. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of ESS Tech has no effect on the direction of FuelCell Energy i.e., FuelCell Energy and ESS Tech go up and down completely randomly.
Pair Corralation between FuelCell Energy and ESS Tech
Given the investment horizon of 90 days FuelCell Energy is expected to under-perform the ESS Tech. In addition to that, FuelCell Energy is 1.0 times more volatile than ESS Tech. It trades about -0.06 of its total potential returns per unit of risk. ESS Tech is currently generating about -0.04 per unit of volatility. If you would invest 2,490 in ESS Tech on August 28, 2024 and sell it today you would lose (1,905) from holding ESS Tech or give up 76.51% of portfolio value over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Insignificant |
| Accuracy | 100.0% |
| Values | Daily Returns |
FuelCell Energy vs. ESS Tech
Performance |
| Timeline |
| FuelCell Energy |
| ESS Tech |
FuelCell Energy and ESS Tech Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with FuelCell Energy and ESS Tech
The main advantage of trading using opposite FuelCell Energy and ESS Tech positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if FuelCell Energy position performs unexpectedly, ESS Tech 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 ESS Tech will offset losses from the drop in ESS Tech's long position.| FuelCell Energy vs. Bloom Energy Corp | FuelCell Energy vs. Eos Energy Enterprises | FuelCell Energy vs. Sunrise New Energy | FuelCell Energy vs. GrafTech International |
| ESS Tech vs. Fluence Energy | ESS Tech vs. Solid Power | ESS Tech vs. Eos Energy Enterprises | ESS Tech vs. FREYR Battery SA |
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 Stock Screener module to find equities using a custom stock filter or screen asymmetry in trading patterns, price, volume, or investment outlook..
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