Correlation Between Spark Power and Fusion Fuel
Can any of the company-specific risk be diversified away by investing in both Spark Power and Fusion Fuel 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 Spark Power and Fusion Fuel into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Spark Power Group and Fusion Fuel Green, you can compare the effects of market volatilities on Spark Power and Fusion Fuel 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 Spark Power with a short position of Fusion Fuel. Check out your portfolio center. Please also check ongoing floating volatility patterns of Spark Power and Fusion Fuel.
Diversification Opportunities for Spark Power and Fusion Fuel
0.77 | Correlation Coefficient |
Poor diversification
The 3 months correlation between Spark and Fusion is 0.77. Overlapping area represents the amount of risk that can be diversified away by holding Spark Power Group and Fusion Fuel Green in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Fusion Fuel Green and Spark Power 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 Spark Power Group are associated (or correlated) with Fusion Fuel. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Fusion Fuel Green has no effect on the direction of Spark Power i.e., Spark Power and Fusion Fuel go up and down completely randomly.
Pair Corralation between Spark Power and Fusion Fuel
Assuming the 90 days horizon Spark Power Group is expected to generate 5.82 times more return on investment than Fusion Fuel. However, Spark Power is 5.82 times more volatile than Fusion Fuel Green. It trades about 0.12 of its potential returns per unit of risk. Fusion Fuel Green is currently generating about 0.03 per unit of risk. If you would invest 2.00 in Spark Power Group on August 28, 2024 and sell it today you would earn a total of 25.00 from holding Spark Power Group or generate 1250.0% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Significant |
| Accuracy | 31.52% |
| Values | Daily Returns |
Spark Power Group vs. Fusion Fuel Green
Performance |
| Timeline |
| Spark Power Group |
Risk-Adjusted Performance
0 of 100
Weak | Strong |
Very Weak
| Fusion Fuel Green |
Spark Power and Fusion Fuel Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Spark Power and Fusion Fuel
The main advantage of trading using opposite Spark Power and Fusion Fuel positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Spark Power position performs unexpectedly, Fusion Fuel 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 Fusion Fuel will offset losses from the drop in Fusion Fuel's long position.The idea behind Spark Power Group and Fusion Fuel Green 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.| Fusion Fuel vs. Fusion Fuel Green | Fusion Fuel vs. Advent Technologies Holdings | Fusion Fuel vs. Eos Energy Enterprises | Fusion Fuel vs. CuriosityStream |
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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