Correlation Between ESS Tech and Eos Energy
Can any of the company-specific risk be diversified away by investing in both ESS Tech and Eos 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 Eos 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 Eos Energy Enterprises, you can compare the effects of market volatilities on ESS Tech and Eos 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 Eos Energy. Check out your portfolio center. Please also check ongoing floating volatility patterns of ESS Tech and Eos Energy.
Diversification Opportunities for ESS Tech and Eos Energy
0.41 | Correlation Coefficient |
Very weak diversification
The 3 months correlation between ESS and Eos is 0.41. Overlapping area represents the amount of risk that can be diversified away by holding ESS Tech and Eos Energy Enterprises in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Eos Energy Enterprises 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 Eos Energy. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Eos Energy Enterprises has no effect on the direction of ESS Tech i.e., ESS Tech and Eos Energy go up and down completely randomly.
Pair Corralation between ESS Tech and Eos Energy
Considering the 90-day investment horizon ESS Tech is expected to under-perform the Eos Energy. But the stock apears to be less risky and, when comparing its historical volatility, ESS Tech is 1.22 times less risky than Eos Energy. The stock trades about -0.04 of its potential returns per unit of risk. The Eos Energy Enterprises is currently generating about 0.06 of returns per unit of risk over similar time horizon. If you would invest 115.00 in Eos Energy Enterprises on August 24, 2024 and sell it today you would earn a total of 155.00 from holding Eos Energy Enterprises or generate 134.78% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
ESS Tech vs. Eos Energy Enterprises
Performance |
| Timeline |
| ESS Tech |
| Eos Energy Enterprises |
ESS Tech and Eos Energy Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with ESS Tech and Eos Energy
The main advantage of trading using opposite ESS Tech and Eos Energy positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if ESS Tech position performs unexpectedly, Eos 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 Eos Energy will offset losses from the drop in Eos Energy's long position.| ESS Tech vs. Plug Power | ESS Tech vs. Solid Power | ESS Tech vs. CBAK Energy Technology | ESS Tech vs. FuelCell Energy |
| Eos Energy vs. FREYR Battery SA | Eos Energy vs. Microvast Holdings | Eos Energy vs. Chardan NexTech Acquisition | Eos Energy vs. Solid Power |
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 Transaction History module to view history of all your transactions and understand their impact on performance.
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