Correlation Between Fluence Energy and Renew Energy

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

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

Diversification Opportunities for Fluence Energy and Renew Energy

-0.12

Correlation Coefficient

Fluence Energy  Renew Energy

Good diversification

The 3 months correlation between Fluence and Renew is -0.12. Overlapping area represents the amount of risk that can be diversified away by holding Fluence Energy and Renew Energy Global in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Renew Energy Global and Fluence 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 Fluence Energy are associated (or correlated) with Renew Energy. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Renew Energy Global has no effect on the direction of Fluence Energy i.e., Fluence Energy and Renew Energy go up and down completely randomly.

Pair Corralation between Fluence Energy and Renew Energy

Given the investment horizon of 90 days Fluence Energy is expected to generate 1.82 times more return on investment than Renew Energy. However, Fluence Energy is 1.82 times more volatile than Renew Energy Global. It trades about 0.03 of its potential returns per unit of risk. Renew Energy Global is currently generating about 0.03 per unit of risk. If you would invest  1,776  in Fluence Energy on February 19, 2024 and sell it today you would earn a total of  56.00  from holding Fluence Energy or generate 3.15% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Against
Strength	Insignificant
Accuracy	98.44%
Values	Daily Returns

Fluence Energy  vs.  Renew Energy Global

Fluence Energy

Risk-Adjusted Performance

2 of 100

Weak

Compared to the overall equity markets, risk-adjusted returns on investments in Fluence Energy are ranked lower than 2 (%) of all global equities and portfolios over the last 90 days. In spite of rather uncertain basic indicators, Fluence Energy may actually be approaching a critical reversion point that can send shares even higher in June 2024.

Renew Energy Global

Risk-Adjusted Performance

2 of 100

Weak

Compared to the overall equity markets, risk-adjusted returns on investments in Renew Energy Global are ranked lower than 2 (%) of all global equities and portfolios over the last 90 days. In spite of fairly stable basic indicators, Renew Energy is not utilizing all of its potentials. The newest stock price fuss, may contribute to near-short-term losses for the sophisticated investors.

Pair Trading with Fluence Energy and Renew Energy

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

The idea behind Fluence Energy and Renew Energy Global 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 Analysis module to research over 250,000 global equities including funds, stocks and ETFs to find investment opportunities.