Correlation Between Nextera Energy and Fusion Fuel
Can any of the company-specific risk be diversified away by investing in both Nextera Energy and Fusion Fuel 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 Nextera Energy and Fusion Fuel into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Nextera Energy Partners and Fusion Fuel Green, you can compare the effects of market volatilities on Nextera Energy and Fusion Fuel 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 Nextera Energy with a short position of Fusion Fuel. Check out your portfolio center. Please also check ongoing floating volatility patterns of Nextera Energy and Fusion Fuel.
Diversification Opportunities for Nextera Energy and Fusion Fuel
0.44 | Correlation Coefficient |
Very weak diversification
The 3 months correlation between Nextera and Fusion is 0.44. Overlapping area represents the amount of risk that can be diversified away by holding Nextera Energy Partners and Fusion Fuel Green in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Fusion Fuel Green and Nextera Energy 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 Nextera Energy Partners are associated (or correlated) with Fusion Fuel. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Fusion Fuel Green has no effect on the direction of Nextera Energy i.e., Nextera Energy and Fusion Fuel go up and down completely randomly.
Pair Corralation between Nextera Energy and Fusion Fuel
Considering the 90-day investment horizon Nextera Energy Partners is expected to under-perform the Fusion Fuel. But the stock apears to be less risky and, when comparing its historical volatility, Nextera Energy Partners is 2.62 times less risky than Fusion Fuel. The stock trades about -0.41 of its potential returns per unit of risk. The Fusion Fuel Green is currently generating about -0.06 of returns per unit of risk over similar time horizon. If you would invest 2.80 in Fusion Fuel Green on November 4, 2024 and sell it today you would lose (1.08) from holding Fusion Fuel Green or give up 38.57% of portfolio value over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
Nextera Energy Partners vs. Fusion Fuel Green
Performance |
| Timeline |
| Nextera Energy Partners |
| Fusion Fuel Green |
Nextera Energy and Fusion Fuel Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Nextera Energy and Fusion Fuel
The main advantage of trading using opposite Nextera Energy and Fusion Fuel positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Nextera Energy position performs unexpectedly, Fusion Fuel 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 Fusion Fuel will offset losses from the drop in Fusion Fuel's long position.| Nextera Energy vs. Brookfield Renewable Corp | Nextera Energy vs. Algonquin Power Utilities | Nextera Energy vs. Clearway Energy Class | Nextera Energy vs. Clearway Energy |
| Fusion Fuel vs. Fusion Fuel Green | Fusion Fuel vs. Advent Technologies Holdings | Fusion Fuel vs. Eos Energy Enterprises | Fusion Fuel vs. CuriosityStream |
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 Stock Screener module to find equities using a custom stock filter or screen asymmetry in trading patterns, price, volume, or investment outlook..
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