Correlation Between ESS Tech and FuelCell Energy
Can any of the company-specific risk be diversified away by investing in both ESS Tech and FuelCell 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 FuelCell 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 FuelCell Energy, you can compare the effects of market volatilities on ESS Tech and FuelCell 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 FuelCell Energy. Check out your portfolio center. Please also check ongoing floating volatility patterns of ESS Tech and FuelCell Energy.
Diversification Opportunities for ESS Tech and FuelCell Energy
-0.36 | Correlation Coefficient |
Very good diversification
The 3 months correlation between ESS and FuelCell is -0.36. Overlapping area represents the amount of risk that can be diversified away by holding ESS Tech and FuelCell Energy in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on FuelCell Energy 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 FuelCell Energy. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of FuelCell Energy has no effect on the direction of ESS Tech i.e., ESS Tech and FuelCell Energy go up and down completely randomly.
Pair Corralation between ESS Tech and FuelCell Energy
Considering the 90-day investment horizon ESS Tech is expected to generate 0.97 times more return on investment than FuelCell Energy. However, ESS Tech is 1.04 times less risky than FuelCell Energy. It trades about -0.07 of its potential returns per unit of risk. FuelCell Energy is currently generating about -0.12 per unit of risk. If you would invest 1,190 in ESS Tech on August 24, 2024 and sell it today you would lose (671.00) from holding ESS Tech or give up 56.39% of portfolio value over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Insignificant |
| Accuracy | 100.0% |
| Values | Daily Returns |
ESS Tech vs. FuelCell Energy
Performance |
| Timeline |
| ESS Tech |
| FuelCell Energy |
ESS Tech and FuelCell Energy Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with ESS Tech and FuelCell Energy
The main advantage of trading using opposite ESS Tech and FuelCell Energy positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if ESS Tech position performs unexpectedly, FuelCell 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 FuelCell Energy will offset losses from the drop in FuelCell 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 |
| FuelCell Energy vs. Bloom Energy Corp | FuelCell Energy vs. Microvast Holdings | FuelCell Energy vs. Solid Power | FuelCell Energy 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 Stocks Directory module to find actively traded stocks across global markets.
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