Correlation Between FuelCell Energy and Dow Jones
Can any of the company-specific risk be diversified away by investing in both FuelCell Energy and Dow Jones 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 Dow Jones into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between FuelCell Energy and Dow Jones Industrial, you can compare the effects of market volatilities on FuelCell Energy and Dow Jones 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 Dow Jones. Check out your portfolio center. Please also check ongoing floating volatility patterns of FuelCell Energy and Dow Jones.
Diversification Opportunities for FuelCell Energy and Dow Jones
-0.18 | Correlation Coefficient |
Good diversification
The 3 months correlation between FuelCell and Dow is -0.18. Overlapping area represents the amount of risk that can be diversified away by holding FuelCell Energy and Dow Jones Industrial in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Dow Jones Industrial 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 Dow Jones. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Dow Jones Industrial has no effect on the direction of FuelCell Energy i.e., FuelCell Energy and Dow Jones go up and down completely randomly.
Pair Corralation between FuelCell Energy and Dow Jones
Assuming the 90 days trading horizon FuelCell Energy is expected to under-perform the Dow Jones. In addition to that, FuelCell Energy is 10.03 times more volatile than Dow Jones Industrial. It trades about -0.05 of its total potential returns per unit of risk. Dow Jones Industrial is currently generating about -0.3 per unit of volatility. If you would invest 4,473,657 in Dow Jones Industrial on September 24, 2024 and sell it today you would lose (189,631) from holding Dow Jones Industrial or give up 4.24% 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. Dow Jones Industrial
Performance |
| Timeline |
FuelCell Energy and Dow Jones Volatility Contrast
Predicted Return Density |
| Returns |
FuelCell Energy
Pair trading matchups for FuelCell Energy
Dow Jones Industrial
Pair trading matchups for Dow Jones
Pair Trading with FuelCell Energy and Dow Jones
The main advantage of trading using opposite FuelCell Energy and Dow Jones positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if FuelCell Energy position performs unexpectedly, Dow Jones 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 Dow Jones will offset losses from the drop in Dow Jones' long position.| FuelCell Energy vs. DIVERSIFIED ROYALTY | FuelCell Energy vs. BJs Wholesale Club | FuelCell Energy vs. COSTCO WHOLESALE CDR | FuelCell Energy vs. Vastned Retail NV |
| Dow Jones vs. Teleflex Incorporated | Dow Jones vs. Sonida Senior Living | Dow Jones vs. Avadel Pharmaceuticals PLC | Dow Jones vs. Cardinal Health |
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 Money Flow Index module to determine momentum by analyzing Money Flow Index and other technical indicators.
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