Correlation Between ESS Tech and Bloom Energy
Can any of the company-specific risk be diversified away by investing in both ESS Tech and Bloom Energy 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 ESS Tech and Bloom Energy into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between ESS Tech and Bloom Energy Corp, you can compare the effects of market volatilities on ESS Tech and Bloom Energy 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 ESS Tech with a short position of Bloom Energy. Check out your portfolio center. Please also check ongoing floating volatility patterns of ESS Tech and Bloom Energy.
Diversification Opportunities for ESS Tech and Bloom Energy
-0.38 | Correlation Coefficient |
Very good diversification
The 3 months correlation between ESS and Bloom is -0.38. Overlapping area represents the amount of risk that can be diversified away by holding ESS Tech and Bloom Energy Corp in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Bloom Energy Corp and ESS Tech 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 ESS Tech are associated (or correlated) with Bloom Energy. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Bloom Energy Corp has no effect on the direction of ESS Tech i.e., ESS Tech and Bloom Energy go up and down completely randomly.
Pair Corralation between ESS Tech and Bloom Energy
Considering the 90-day investment horizon ESS Tech is expected to under-perform the Bloom Energy. But the stock apears to be less risky and, when comparing its historical volatility, ESS Tech is 1.32 times less risky than Bloom Energy. The stock trades about -0.07 of its potential returns per unit of risk. The Bloom Energy Corp is currently generating about 0.38 of returns per unit of risk over similar time horizon. If you would invest 1,014 in Bloom Energy Corp on August 30, 2024 and sell it today you would earn a total of 1,707 from holding Bloom Energy Corp or generate 168.34% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Insignificant |
| Accuracy | 95.65% |
| Values | Daily Returns |
ESS Tech vs. Bloom Energy Corp
Performance |
| Timeline |
| ESS Tech |
| Bloom Energy Corp |
ESS Tech and Bloom Energy Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with ESS Tech and Bloom Energy
The main advantage of trading using opposite ESS Tech and Bloom Energy positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if ESS Tech position performs unexpectedly, Bloom Energy 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 Bloom Energy will offset losses from the drop in Bloom Energy's long position.| ESS Tech vs. Fluence Energy | ESS Tech vs. Solid Power | ESS Tech vs. Eos Energy Enterprises | ESS Tech vs. FREYR Battery SA |
| Bloom Energy vs. Plug Power | Bloom Energy vs. Microvast Holdings | Bloom Energy vs. Solid Power | Bloom Energy vs. CBAK Energy Technology |
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 Valuation module to check real value of public entities based on technical and fundamental data.
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