Correlation Between Solid Power and Enovix Corp
Can any of the company-specific risk be diversified away by investing in both Solid Power and Enovix Corp 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 Solid Power and Enovix Corp into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Solid Power and Enovix Corp, you can compare the effects of market volatilities on Solid Power and Enovix Corp 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 Solid Power with a short position of Enovix Corp. Check out your portfolio center. Please also check ongoing floating volatility patterns of Solid Power and Enovix Corp.
Diversification Opportunities for Solid Power and Enovix Corp
0.8 | Correlation Coefficient |
Very poor diversification
The 3 months correlation between Solid and Enovix is 0.8. Overlapping area represents the amount of risk that can be diversified away by holding Solid Power and Enovix Corp in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Enovix Corp and Solid 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 Solid Power are associated (or correlated) with Enovix Corp. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Enovix Corp has no effect on the direction of Solid Power i.e., Solid Power and Enovix Corp go up and down completely randomly.
Pair Corralation between Solid Power and Enovix Corp
Given the investment horizon of 90 days Solid Power is expected to under-perform the Enovix Corp. But the stock apears to be less risky and, when comparing its historical volatility, Solid Power is 1.27 times less risky than Enovix Corp. The stock trades about -0.36 of its potential returns per unit of risk. The Enovix Corp is currently generating about 0.03 of returns per unit of risk over similar time horizon. If you would invest 1,211 in Enovix Corp on November 3, 2024 and sell it today you would lose (5.00) from holding Enovix Corp or give up 0.41% of portfolio value over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Strong |
| Accuracy | 100.0% |
| Values | Daily Returns |
Solid Power vs. Enovix Corp
Performance |
| Timeline |
| Solid Power |
| Enovix Corp |
Solid Power and Enovix Corp Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Solid Power and Enovix Corp
The main advantage of trading using opposite Solid Power and Enovix Corp positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Solid Power position performs unexpectedly, Enovix Corp 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 Enovix Corp will offset losses from the drop in Enovix Corp's long position.| Solid Power vs. Plug Power | Solid Power vs. FREYR Battery SA | Solid Power vs. FuelCell Energy | Solid Power vs. Enovix Corp |
| Enovix Corp vs. ESS Tech | Enovix Corp vs. FREYR Battery SA | Enovix Corp vs. Microvast Holdings | Enovix Corp vs. Eos Energy Enterprises |
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 Efficient Frontier module to plot and analyze your portfolio and positions against risk-return landscape of the market..
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