Correlation Between FuelCell Energy and Powerstorm Holdings
Can any of the company-specific risk be diversified away by investing in both FuelCell Energy and Powerstorm Holdings 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 Powerstorm Holdings into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between FuelCell Energy and Powerstorm Holdings, you can compare the effects of market volatilities on FuelCell Energy and Powerstorm Holdings 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 Powerstorm Holdings. Check out your portfolio center. Please also check ongoing floating volatility patterns of FuelCell Energy and Powerstorm Holdings.
Diversification Opportunities for FuelCell Energy and Powerstorm Holdings
0.4 | Correlation Coefficient |
Very weak diversification
The 3 months correlation between FuelCell and Powerstorm is 0.4. Overlapping area represents the amount of risk that can be diversified away by holding FuelCell Energy and Powerstorm Holdings in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Powerstorm Holdings 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 Powerstorm Holdings. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Powerstorm Holdings has no effect on the direction of FuelCell Energy i.e., FuelCell Energy and Powerstorm Holdings go up and down completely randomly.
Pair Corralation between FuelCell Energy and Powerstorm Holdings
Given the investment horizon of 90 days FuelCell Energy is expected to under-perform the Powerstorm Holdings. But the stock apears to be less risky and, when comparing its historical volatility, FuelCell Energy is 2.16 times less risky than Powerstorm Holdings. The stock trades about -0.05 of its potential returns per unit of risk. The Powerstorm Holdings is currently generating about 0.01 of returns per unit of risk over similar time horizon. If you would invest 13.00 in Powerstorm Holdings on September 3, 2024 and sell it today you would lose (11.86) from holding Powerstorm Holdings or give up 91.23% of portfolio value over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Weak |
| Accuracy | 99.8% |
| Values | Daily Returns |
FuelCell Energy vs. Powerstorm Holdings
Performance |
| Timeline |
| FuelCell Energy |
| Powerstorm Holdings |
FuelCell Energy and Powerstorm Holdings Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with FuelCell Energy and Powerstorm Holdings
The main advantage of trading using opposite FuelCell Energy and Powerstorm Holdings positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if FuelCell Energy position performs unexpectedly, Powerstorm Holdings 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 Powerstorm Holdings will offset losses from the drop in Powerstorm Holdings' long position.| FuelCell Energy vs. Bloom Energy Corp | FuelCell Energy vs. Elong Power Holding | FuelCell Energy vs. Enovix Corp | FuelCell Energy vs. Sunrise New Energy |
| Powerstorm Holdings vs. Solid Power | Powerstorm Holdings vs. Plug Power | Powerstorm Holdings vs. FREYR Battery SA | Powerstorm Holdings vs. FuelCell Energy |
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 Portfolio Volatility module to check portfolio volatility and analyze historical return density to properly model market risk.
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