Correlation Between Ideal Power and Plug Power
Can any of the company-specific risk be diversified away by investing in both Ideal Power and Plug 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 Ideal Power and Plug Power into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Ideal Power and Plug Power, you can compare the effects of market volatilities on Ideal Power and Plug 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 Ideal Power with a short position of Plug Power. Check out your portfolio center. Please also check ongoing floating volatility patterns of Ideal Power and Plug Power.
Diversification Opportunities for Ideal Power and Plug Power
0.05 | Correlation Coefficient |
Significant diversification
The 3 months correlation between Ideal and Plug is 0.05. Overlapping area represents the amount of risk that can be diversified away by holding Ideal Power and Plug Power in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Plug Power and Ideal 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 Ideal Power are associated (or correlated) with Plug Power. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Plug Power has no effect on the direction of Ideal Power i.e., Ideal Power and Plug Power go up and down completely randomly.
Pair Corralation between Ideal Power and Plug Power
Given the investment horizon of 90 days Ideal Power is expected to under-perform the Plug Power. But the stock apears to be less risky and, when comparing its historical volatility, Ideal Power is 1.23 times less risky than Plug Power. The stock trades about -0.05 of its potential returns per unit of risk. The Plug Power is currently generating about -0.02 of returns per unit of risk over similar time horizon. If you would invest 363.00 in Plug Power on September 1, 2024 and sell it today you would lose (139.00) from holding Plug Power or give up 38.29% of portfolio value over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Insignificant |
| Accuracy | 100.0% |
| Values | Daily Returns |
Ideal Power vs. Plug Power
Performance |
| Timeline |
| Ideal Power |
| Plug Power |
Ideal Power and Plug Power Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Ideal Power and Plug Power
The main advantage of trading using opposite Ideal Power and Plug Power positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Ideal Power position performs unexpectedly, Plug 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 Plug Power will offset losses from the drop in Plug Power's long position.| Ideal Power vs. Energizer Holdings | Ideal Power vs. Kimball Electronics | Ideal Power vs. NeoVolta Common Stock | Ideal Power vs. Espey Mfg Electronics |
| Plug Power vs. Bloom Energy Corp | Plug Power vs. Microvast Holdings | Plug Power vs. Solid Power | Plug Power vs. FREYR Battery SA |
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 Portfolio Diagnostics module to use generated alerts and portfolio events aggregator to diagnose current holdings.
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