Correlation Between Enovix Corp and FuelCell Energy
Can any of the company-specific risk be diversified away by investing in both Enovix Corp 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 Enovix Corp and FuelCell Energy into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Enovix Corp and FuelCell Energy, you can compare the effects of market volatilities on Enovix Corp 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 Enovix Corp with a short position of FuelCell Energy. Check out your portfolio center. Please also check ongoing floating volatility patterns of Enovix Corp and FuelCell Energy.
Diversification Opportunities for Enovix Corp and FuelCell Energy
0.78 | Correlation Coefficient |
Poor diversification
The 3 months correlation between Enovix and FuelCell is 0.78. Overlapping area represents the amount of risk that can be diversified away by holding Enovix Corp and FuelCell Energy in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on FuelCell Energy and Enovix Corp 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 Enovix Corp 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 Enovix Corp i.e., Enovix Corp and FuelCell Energy go up and down completely randomly.
Pair Corralation between Enovix Corp and FuelCell Energy
Given the investment horizon of 90 days Enovix Corp is expected to under-perform the FuelCell Energy. But the stock apears to be less risky and, when comparing its historical volatility, Enovix Corp is 1.04 times less risky than FuelCell Energy. The stock trades about -0.04 of its potential returns per unit of risk. The FuelCell Energy is currently generating about -0.04 of returns per unit of risk over similar time horizon. If you would invest 202.00 in FuelCell Energy on January 19, 2024 and sell it today you would lose (106.00) from holding FuelCell Energy or give up 52.48% of portfolio value over 90 days.
Time Period | 3 Months [change] |
Direction | Moves Together |
Strength | Significant |
Accuracy | 99.6% |
Values | Daily Returns |
Enovix Corp vs. FuelCell Energy
Performance |
Timeline |
Enovix Corp |
FuelCell Energy |
Enovix Corp and FuelCell Energy Volatility Contrast
Predicted Return Density |
Returns |
Pair Trading with Enovix Corp and FuelCell Energy
The main advantage of trading using opposite Enovix Corp and FuelCell Energy positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Enovix Corp 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.Enovix Corp vs. Energizer Holdings | Enovix Corp vs. Hollysys Automation Technologies | Enovix Corp vs. Espey Mfg Electronics | Enovix Corp vs. Preformed Line Products |
FuelCell Energy vs. Energizer Holdings | FuelCell Energy vs. Hollysys Automation Technologies | FuelCell Energy vs. Espey Mfg Electronics | FuelCell Energy vs. Preformed Line Products |
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 Latest Portfolios module to quick portfolio dashboard that showcases your latest portfolios.
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