Correlation Between FuelCell Energy and Solid Power
Can any of the company-specific risk be diversified away by investing in both FuelCell Energy and Solid Power 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 Solid Power into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between FuelCell Energy and Solid Power, you can compare the effects of market volatilities on FuelCell Energy and Solid Power 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 Solid Power. Check out your portfolio center. Please also check ongoing floating volatility patterns of FuelCell Energy and Solid Power.
Diversification Opportunities for FuelCell Energy and Solid Power
0.22 | Correlation Coefficient |
Modest diversification
The 3 months correlation between FuelCell and Solid is 0.22. Overlapping area represents the amount of risk that can be diversified away by holding FuelCell Energy and Solid Power in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Solid Power 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 Solid Power. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Solid Power has no effect on the direction of FuelCell Energy i.e., FuelCell Energy and Solid Power go up and down completely randomly.
Pair Corralation between FuelCell Energy and Solid Power
Given the investment horizon of 90 days FuelCell Energy is expected to generate 1.13 times more return on investment than Solid Power. However, FuelCell Energy is 1.13 times more volatile than Solid Power. It trades about -0.23 of its potential returns per unit of risk. Solid Power is currently generating about -0.36 per unit of risk. If you would invest 1,037 in FuelCell Energy on November 3, 2024 and sell it today you would lose (269.00) from holding FuelCell Energy or give up 25.94% of portfolio value over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Very Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
FuelCell Energy vs. Solid Power
Performance |
| Timeline |
| FuelCell Energy |
| Solid Power |
FuelCell Energy and Solid Power Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with FuelCell Energy and Solid Power
The main advantage of trading using opposite FuelCell Energy and Solid Power positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if FuelCell Energy position performs unexpectedly, Solid Power 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 Solid Power will offset losses from the drop in Solid Power's long position.| FuelCell Energy vs. Bloom Energy Corp | FuelCell Energy vs. Microvast Holdings | FuelCell Energy vs. Solid Power | FuelCell Energy vs. Enovix Corp |
| Solid Power vs. Plug Power | Solid Power vs. FREYR Battery SA | Solid Power vs. FuelCell Energy | Solid Power vs. Enovix Corp |
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 Equity Forecasting module to use basic forecasting models to generate price predictions and determine price momentum.
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