Correlation Between Flux Power and Bloom Energy

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

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

Diversification Opportunities for Flux Power and Bloom Energy

0.08

Correlation Coefficient

Flux Power  Bloom Energy

Significant diversification

The 3 months correlation between Flux and Bloom is 0.08. Overlapping area represents the amount of risk that can be diversified away by holding Flux Power Holdings and Bloom Energy Corp in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Bloom Energy Corp and Flux 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 Flux Power Holdings are associated (or correlated) with Bloom Energy. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Bloom Energy Corp has no effect on the direction of Flux Power i.e., Flux Power and Bloom Energy go up and down completely randomly.

Pair Corralation between Flux Power and Bloom Energy

Given the investment horizon of 90 days Flux Power Holdings is expected to generate 1.55 times more return on investment than Bloom Energy. However, Flux Power is 1.55 times more volatile than Bloom Energy Corp. It trades about 0.06 of its potential returns per unit of risk. Bloom Energy Corp is currently generating about 0.04 per unit of risk. If you would invest  408.00  in Flux Power Holdings on January 20, 2024 and sell it today you would earn a total of  17.00  from holding Flux Power Holdings or generate 4.17% return on investment over 90 days.

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

Flux Power Holdings  vs.  Bloom Energy Corp

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 unsteady performance in the last few months, the Stock's basic indicators remain fairly strong which may send shares a bit higher in May 2024. The current disturbance may also be a sign of long term up-swing for the company investors.

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 fragile performance in the last few months, the Stock's technical and fundamental indicators remain rather sound which may send shares a bit higher in May 2024. The latest tumult may also be a sign of longer-term up-swing for the firm shareholders.

Pair Trading with Flux Power and Bloom Energy

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

The idea behind Flux Power Holdings and Bloom Energy Corp 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 Diagnostics module to use generated alerts and portfolio events aggregator to diagnose current holdings.