Correlation Between Energy Vault and Nextera Energy
Can any of the company-specific risk be diversified away by investing in both Energy Vault and Nextera 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 Nextera 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 Nextera Energy Partners, you can compare the effects of market volatilities on Energy Vault and Nextera 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 Nextera Energy. Check out your portfolio center. Please also check ongoing floating volatility patterns of Energy Vault and Nextera Energy.
Diversification Opportunities for Energy Vault and Nextera Energy
-0.75 | Correlation Coefficient |
Pay attention - limited upside
The 3 months correlation between Energy and Nextera is -0.75. Overlapping area represents the amount of risk that can be diversified away by holding Energy Vault Holdings and Nextera Energy Partners in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Nextera Energy Partners 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 Nextera Energy. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Nextera Energy Partners has no effect on the direction of Energy Vault i.e., Energy Vault and Nextera Energy go up and down completely randomly.
Pair Corralation between Energy Vault and Nextera Energy
Given the investment horizon of 90 days Energy Vault Holdings is expected to generate 3.14 times more return on investment than Nextera Energy. However, Energy Vault is 3.14 times more volatile than Nextera Energy Partners. It trades about 0.07 of its potential returns per unit of risk. Nextera Energy Partners is currently generating about -0.15 per unit of risk. If you would invest 172.00 in Energy Vault Holdings on August 28, 2024 and sell it today you would earn a total of 8.00 from holding Energy Vault Holdings or generate 4.65% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
Energy Vault Holdings vs. Nextera Energy Partners
Performance |
| Timeline |
| Energy Vault Holdings |
| Nextera Energy Partners |
Energy Vault and Nextera Energy Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Energy Vault and Nextera Energy
The main advantage of trading using opposite Energy Vault and Nextera Energy positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Energy Vault position performs unexpectedly, Nextera 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 Nextera Energy will offset losses from the drop in Nextera Energy's long position.| Energy Vault vs. Renew Energy Global | Energy Vault vs. Fluence Energy | Energy Vault vs. Enlight Renewable Energy | Energy Vault vs. Advent Technologies Holdings |
| Nextera Energy vs. Brookfield Renewable Corp | Nextera Energy vs. Algonquin Power Utilities | Nextera Energy vs. Clearway Energy Class | Nextera Energy vs. Atlantica Sustainable Infrastructure |
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 Cryptocurrency Center module to build and monitor diversified portfolio of extremely risky digital assets and cryptocurrency.
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