Correlation Between Energy Vault and Altus Power

Can any of the company-specific risk be diversified away by investing in both Energy Vault and Altus 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 Energy Vault and Altus Power into the same portfolio, which is an essential part of the fundamental portfolio management process.

By analyzing existing cross correlation between Energy Vault Holdings and Altus Power, you can compare the effects of market volatilities on Energy Vault and Altus 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 Energy Vault with a short position of Altus Power. Check out your portfolio center. Please also check ongoing floating volatility patterns of Energy Vault and Altus Power.

Diversification Opportunities for Energy Vault and Altus Power

0.71

Correlation Coefficient

Energy Vault  Altus Power

Poor diversification

The 3 months correlation between Energy and Altus is 0.71. Overlapping area represents the amount of risk that can be diversified away by holding Energy Vault Holdings and Altus Power in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Altus Power and Energy Vault 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 Energy Vault Holdings are associated (or correlated) with Altus Power. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Altus Power has no effect on the direction of Energy Vault i.e., Energy Vault and Altus Power go up and down completely randomly.

Pair Corralation between Energy Vault and Altus Power

Given the investment horizon of 90 days Energy Vault Holdings is expected to under-perform the Altus Power. In addition to that, Energy Vault is 1.24 times more volatile than Altus Power. It trades about -0.26 of its total potential returns per unit of risk. Altus Power is currently generating about -0.06 per unit of volatility. If you would invest  470.00  in Altus Power on February 4, 2024 and sell it today you would lose (35.00) from holding Altus Power or give up 7.45% of portfolio value over 90 days.

Time Period	3 Months [change]
Direction	Moves Together
Strength	Significant
Accuracy	100.0%
Values	Daily Returns

Energy Vault Holdings  vs.  Altus Power

Energy Vault Holdings

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Energy Vault Holdings has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of fairly stable technical and fundamental indicators, Energy Vault is not utilizing all of its potentials. The newest stock price fuss, may contribute to near-short-term losses for the sophisticated investors.

Altus Power

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Altus Power has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of latest weak performance, the Etf's basic indicators remain stable and the newest uproar on Wall Street may also be a sign of mid-term gains for the exchange-traded fund private investors.

Pair Trading with Energy Vault and Altus Power

The main advantage of trading using opposite Energy Vault and Altus Power positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Energy Vault position performs unexpectedly, Altus 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 Altus Power will offset losses from the drop in Altus Power's long position.

The idea behind Energy Vault Holdings and Altus Power 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.

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 Equity Valuation module to check real value of public entities based on technical and fundamental data.