Correlation Between Preformed Line and FuelCell Energy
Can any of the company-specific risk be diversified away by investing in both Preformed Line and FuelCell 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 Preformed Line and FuelCell Energy into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Preformed Line Products and FuelCell Energy, you can compare the effects of market volatilities on Preformed Line and FuelCell 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 Preformed Line with a short position of FuelCell Energy. Check out your portfolio center. Please also check ongoing floating volatility patterns of Preformed Line and FuelCell Energy.
Diversification Opportunities for Preformed Line and FuelCell Energy
-0.82 | Correlation Coefficient |
Pay attention - limited upside
The 3 months correlation between Preformed and FuelCell is -0.82. Overlapping area represents the amount of risk that can be diversified away by holding Preformed Line Products and FuelCell Energy in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on FuelCell Energy and Preformed Line 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 Preformed Line Products are associated (or correlated) with FuelCell Energy. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of FuelCell Energy has no effect on the direction of Preformed Line i.e., Preformed Line and FuelCell Energy go up and down completely randomly.
Pair Corralation between Preformed Line and FuelCell Energy
Given the investment horizon of 90 days Preformed Line Products is expected to generate 0.36 times more return on investment than FuelCell Energy. However, Preformed Line Products is 2.75 times less risky than FuelCell Energy. It trades about 0.02 of its potential returns per unit of risk. FuelCell Energy is currently generating about -0.12 per unit of risk. If you would invest 13,183 in Preformed Line Products on August 24, 2024 and sell it today you would earn a total of 437.00 from holding Preformed Line Products or generate 3.31% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Significant |
| Accuracy | 100.0% |
| Values | Daily Returns |
Preformed Line Products vs. FuelCell Energy
Performance |
| Timeline |
| Preformed Line Products |
| FuelCell Energy |
Preformed Line and FuelCell Energy Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Preformed Line and FuelCell Energy
The main advantage of trading using opposite Preformed Line and FuelCell Energy positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Preformed Line position performs unexpectedly, FuelCell 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 FuelCell Energy will offset losses from the drop in FuelCell Energy's long position.| Preformed Line vs. Kimball Electronics | Preformed Line vs. nVent Electric PLC | Preformed Line vs. Espey Mfg Electronics | Preformed Line vs. Hubbell |
| FuelCell Energy vs. Bloom Energy Corp | FuelCell Energy vs. Microvast Holdings | FuelCell Energy vs. Solid Power | FuelCell Energy 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 Headlines Timeline module to stay connected to all market stories and filter out noise. Drill down to analyze hype elasticity.
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