Correlation Between Solid Power and FuelCell Energy
Can any of the company-specific risk be diversified away by investing in both Solid Power 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 Solid Power and FuelCell Energy into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Solid Power and FuelCell Energy, you can compare the effects of market volatilities on Solid Power 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 Solid Power with a short position of FuelCell Energy. Check out your portfolio center. Please also check ongoing floating volatility patterns of Solid Power and FuelCell Energy.
Diversification Opportunities for Solid Power and FuelCell Energy
0.22 | Correlation Coefficient |
Modest diversification
The 3 months correlation between Solid and FuelCell is 0.22. Overlapping area represents the amount of risk that can be diversified away by holding Solid Power and FuelCell Energy in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on FuelCell Energy 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 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 Solid Power i.e., Solid Power and FuelCell Energy go up and down completely randomly.
Pair Corralation between Solid Power and FuelCell Energy
Given the investment horizon of 90 days Solid Power is expected to generate 1.22 times more return on investment than FuelCell Energy. However, Solid Power is 1.22 times more volatile than FuelCell Energy. It trades about 0.1 of its potential returns per unit of risk. FuelCell Energy is currently generating about -0.1 per unit of risk. If you would invest 113.00 in Solid Power on November 3, 2024 and sell it today you would earn a total of 26.00 from holding Solid Power or generate 23.01% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Very Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
Solid Power vs. FuelCell Energy
Performance |
| Timeline |
| Solid Power |
| FuelCell Energy |
Solid Power and FuelCell Energy Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Solid Power and FuelCell Energy
The main advantage of trading using opposite Solid Power and FuelCell Energy positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Solid Power 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.| Solid Power vs. Plug Power | Solid Power vs. FREYR Battery SA | Solid Power vs. FuelCell Energy | Solid Power vs. Enovix Corp |
| 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 Pattern Recognition module to use different Pattern Recognition models to time the market across multiple global exchanges.
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