Correlation Between Energy Vault and Alternus Energy

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Can any of the company-specific risk be diversified away by investing in both Energy Vault and Alternus 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 Energy Vault and Alternus Energy into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Energy Vault Holdings and Alternus Energy Group, you can compare the effects of market volatilities on Energy Vault and Alternus 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 Energy Vault with a short position of Alternus Energy. Check out your portfolio center. Please also check ongoing floating volatility patterns of Energy Vault and Alternus Energy.

Diversification Opportunities for Energy Vault and Alternus Energy

-0.73
  Correlation Coefficient

Pay attention - limited upside

The 3 months correlation between Energy and Alternus is -0.73. Overlapping area represents the amount of risk that can be diversified away by holding Energy Vault Holdings and Alternus Energy Group in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Alternus Energy Group and Energy Vault 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 Energy Vault Holdings are associated (or correlated) with Alternus Energy. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Alternus Energy Group has no effect on the direction of Energy Vault i.e., Energy Vault and Alternus Energy go up and down completely randomly.

Pair Corralation between Energy Vault and Alternus Energy

Given the investment horizon of 90 days Energy Vault Holdings is expected to generate 1.09 times more return on investment than Alternus Energy. However, Energy Vault is 1.09 times more volatile than Alternus Energy Group. It trades about 0.02 of its potential returns per unit of risk. Alternus Energy Group is currently generating about -0.14 per unit of risk. If you would invest  277.00  in Energy Vault Holdings on August 27, 2024 and sell it today you would lose (118.00) from holding Energy Vault Holdings or give up 42.6% of portfolio value over 90 days.
Time Period3 Months [change]
DirectionMoves Against 
StrengthWeak
Accuracy94.15%
ValuesDaily Returns

Energy Vault Holdings  vs.  Alternus Energy Group

 Performance 
       Timeline  
Energy Vault Holdings 

Risk-Adjusted Performance

9 of 100

 
Weak
 
Strong
OK
Compared to the overall equity markets, risk-adjusted returns on investments in Energy Vault Holdings are ranked lower than 9 (%) of all global equities and portfolios over the last 90 days. In spite of fairly weak technical and fundamental indicators, Energy Vault showed solid returns over the last few months and may actually be approaching a breakup point.
Alternus Energy Group 

Risk-Adjusted Performance

0 of 100

 
Weak
 
Strong
Very Weak
Over the last 90 days Alternus Energy Group has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of unfluctuating performance in the last few months, the Stock's fundamental indicators remain rather sound which may send shares a bit higher in December 2024. The latest tumult may also be a sign of longer-term up-swing for the firm shareholders.

Energy Vault and Alternus Energy Volatility Contrast

   Predicted Return Density   
       Returns  

Pair Trading with Energy Vault and Alternus Energy

The main advantage of trading using opposite Energy Vault and Alternus Energy positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Energy Vault position performs unexpectedly, Alternus 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 Alternus Energy will offset losses from the drop in Alternus Energy's long position.
The idea behind Energy Vault Holdings and Alternus Energy Group pairs trading is to make the combined position market-neutral, meaning the overall market's direction will not affect its win or loss (or potential downside or upside). This can be achieved by designing a pairs trade with two highly correlated stocks or equities that operate in a similar space or sector, making it possible to obtain profits through simple and relatively low-risk investment.
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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 Optimization module to compute new portfolio that will generate highest expected return given your specified tolerance for risk.

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