Correlation Between Flux Power and Ideal Power
Can any of the company-specific risk be diversified away by investing in both Flux Power and Ideal 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 Flux Power and Ideal Power into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Flux Power Holdings and Ideal Power, you can compare the effects of market volatilities on Flux Power and Ideal 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 Flux Power with a short position of Ideal Power. Check out your portfolio center. Please also check ongoing floating volatility patterns of Flux Power and Ideal Power.
Diversification Opportunities for Flux Power and Ideal Power
0.72 | Correlation Coefficient |
Poor diversification
The 3 months correlation between Flux and Ideal is 0.72. Overlapping area represents the amount of risk that can be diversified away by holding Flux Power Holdings and Ideal Power in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Ideal Power and Flux Power 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 Flux Power Holdings are associated (or correlated) with Ideal Power. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Ideal Power has no effect on the direction of Flux Power i.e., Flux Power and Ideal Power go up and down completely randomly.
Pair Corralation between Flux Power and Ideal Power
Given the investment horizon of 90 days Flux Power Holdings is expected to under-perform the Ideal Power. In addition to that, Flux Power is 1.02 times more volatile than Ideal Power. It trades about -0.29 of its total potential returns per unit of risk. Ideal Power is currently generating about -0.06 per unit of volatility. If you would invest 723.00 in Ideal Power on August 28, 2024 and sell it today you would lose (70.00) from holding Ideal Power or give up 9.68% of portfolio value over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Significant |
| Accuracy | 100.0% |
| Values | Daily Returns |
Flux Power Holdings vs. Ideal Power
Performance |
| Timeline |
| Flux Power Holdings |
| Ideal Power |
Flux Power and Ideal Power Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Flux Power and Ideal Power
The main advantage of trading using opposite Flux Power and Ideal Power positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Flux Power position performs unexpectedly, Ideal 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 Ideal Power will offset losses from the drop in Ideal Power's long position.| Flux Power vs. Bloom Energy Corp | Flux Power vs. Eos Energy Enterprises | Flux Power vs. Sunrise New Energy | Flux Power vs. GrafTech International |
| Ideal Power vs. Bloom Energy Corp | Ideal Power vs. Eos Energy Enterprises | Ideal Power vs. Sunrise New Energy | Ideal Power 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 Performance Analysis module to check effects of mean-variance optimization against your current asset allocation.
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