Correlation Between Bloom Energy and Flux Power

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

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

Diversification Opportunities for Bloom Energy and Flux Power

0.07

Correlation Coefficient

Bloom Energy  Flux Power

Significant diversification

The 3 months correlation between Bloom and Flux is 0.07. Overlapping area represents the amount of risk that can be diversified away by holding Bloom Energy Corp and Flux Power Holdings in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Flux Power Holdings and Bloom Energy 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 Bloom Energy Corp are associated (or correlated) with Flux Power. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Flux Power Holdings has no effect on the direction of Bloom Energy i.e., Bloom Energy and Flux Power go up and down completely randomly.

Pair Corralation between Bloom Energy and Flux Power

Allowing for the 90-day total investment horizon Bloom Energy is expected to generate 1.88 times less return on investment than Flux Power. But when comparing it to its historical volatility, Bloom Energy Corp is 1.57 times less risky than Flux Power. It trades about 0.08 of its potential returns per unit of risk. Flux Power Holdings is currently generating about 0.1 of returns per unit of risk over similar time horizon. If you would invest  392.00  in Flux Power Holdings on January 19, 2024 and sell it today you would earn a total of  33.00  from holding Flux Power Holdings or generate 8.42% return on investment over 90 days.

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

Bloom Energy Corp  vs.  Flux Power Holdings

Bloom Energy Corp

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Bloom Energy Corp has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of latest weak performance, the Stock's technical and fundamental indicators remain sound and the latest tumult on Wall Street may also be a sign of longer-term gains for the firm shareholders.

Flux Power Holdings

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Flux Power Holdings has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of fairly strong basic indicators, Flux Power is not utilizing all of its potentials. The latest stock price disturbance, may contribute to short-term losses for the investors.

Pair Trading with Bloom Energy and Flux Power

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

The idea behind Bloom Energy Corp and Flux Power Holdings 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.

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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 Manager module to state of the art Portfolio Manager to monitor and improve performance of your invested capital.