Correlation Between NVent Electric and Bloom Energy
Can any of the company-specific risk be diversified away by investing in both NVent Electric and Bloom 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 NVent Electric and Bloom Energy into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between nVent Electric PLC and Bloom Energy Corp, you can compare the effects of market volatilities on NVent Electric and Bloom 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 NVent Electric with a short position of Bloom Energy. Check out your portfolio center. Please also check ongoing floating volatility patterns of NVent Electric and Bloom Energy.
Diversification Opportunities for NVent Electric and Bloom Energy
0.49 | Correlation Coefficient |
Very weak diversification
The 3 months correlation between NVent and Bloom is 0.49. Overlapping area represents the amount of risk that can be diversified away by holding nVent Electric PLC and Bloom Energy Corp in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Bloom Energy Corp and NVent Electric 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 nVent Electric PLC are associated (or correlated) with Bloom Energy. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Bloom Energy Corp has no effect on the direction of NVent Electric i.e., NVent Electric and Bloom Energy go up and down completely randomly.
Pair Corralation between NVent Electric and Bloom Energy
Considering the 90-day investment horizon NVent Electric is expected to generate 2.57 times less return on investment than Bloom Energy. But when comparing it to its historical volatility, nVent Electric PLC is 2.69 times less risky than Bloom Energy. It trades about 0.07 of its potential returns per unit of risk. Bloom Energy Corp is currently generating about 0.07 of returns per unit of risk over similar time horizon. If you would invest 1,391 in Bloom Energy Corp on September 3, 2024 and sell it today you would earn a total of 1,301 from holding Bloom Energy Corp or generate 93.53% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
nVent Electric PLC vs. Bloom Energy Corp
Performance |
| Timeline |
| nVent Electric PLC |
| Bloom Energy Corp |
NVent Electric and Bloom Energy Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with NVent Electric and Bloom Energy
The main advantage of trading using opposite NVent Electric and Bloom Energy positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if NVent Electric position performs unexpectedly, Bloom 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 Bloom Energy will offset losses from the drop in Bloom Energy's long position.| NVent Electric vs. Hubbell | NVent Electric vs. Advanced Energy Industries | NVent Electric vs. Vertiv Holdings Co | NVent Electric vs. Energizer Holdings |
| Bloom Energy vs. Plug Power | Bloom Energy vs. Microvast Holdings | Bloom Energy vs. Solid Power | Bloom Energy vs. CBAK Energy Technology |
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 Backtesting module to avoid under-diversification and over-optimization by backtesting your portfolios.
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