Correlation Between NVent Electric and Solid Power
Can any of the company-specific risk be diversified away by investing in both NVent Electric and Solid 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 NVent Electric and Solid Power 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 Solid Power, you can compare the effects of market volatilities on NVent Electric and Solid 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 NVent Electric with a short position of Solid Power. Check out your portfolio center. Please also check ongoing floating volatility patterns of NVent Electric and Solid Power.
Diversification Opportunities for NVent Electric and Solid Power
-0.57 | Correlation Coefficient |
Excellent diversification
The 3 months correlation between NVent and Solid is -0.57. Overlapping area represents the amount of risk that can be diversified away by holding nVent Electric PLC and Solid Power in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Solid Power 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 Solid Power. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Solid Power has no effect on the direction of NVent Electric i.e., NVent Electric and Solid Power go up and down completely randomly.
Pair Corralation between NVent Electric and Solid Power
Considering the 90-day investment horizon nVent Electric PLC is expected to generate 0.42 times more return on investment than Solid Power. However, nVent Electric PLC is 2.36 times less risky than Solid Power. It trades about 0.08 of its potential returns per unit of risk. Solid Power is currently generating about 0.0 per unit of risk. If you would invest 3,786 in nVent Electric PLC on August 31, 2024 and sell it today you would earn a total of 4,045 from holding nVent Electric PLC or generate 106.84% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Very Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
nVent Electric PLC vs. Solid Power
Performance |
| Timeline |
| nVent Electric PLC |
| Solid Power |
NVent Electric and Solid Power Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with NVent Electric and Solid Power
The main advantage of trading using opposite NVent Electric and Solid Power positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if NVent Electric position performs unexpectedly, Solid 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 Solid Power will offset losses from the drop in Solid Power's long position.| NVent Electric vs. Hubbell | NVent Electric vs. Advanced Energy Industries | NVent Electric vs. Vertiv Holdings Co | NVent Electric vs. Energizer Holdings |
| Solid Power vs. Plug Power | Solid Power vs. FREYR Battery SA | Solid Power vs. FuelCell Energy | Solid Power vs. Enovix Corp |
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 Suggestion module to get suggestions outside of your existing asset allocation including your own model portfolios.
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