Correlation Between FuelCell Energy and Lindsell Train
Can any of the company-specific risk be diversified away by investing in both FuelCell Energy and Lindsell Train 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 FuelCell Energy and Lindsell Train into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between FuelCell Energy and Lindsell Train Investment, you can compare the effects of market volatilities on FuelCell Energy and Lindsell Train 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 FuelCell Energy with a short position of Lindsell Train. Check out your portfolio center. Please also check ongoing floating volatility patterns of FuelCell Energy and Lindsell Train.
Diversification Opportunities for FuelCell Energy and Lindsell Train
0.21 | Correlation Coefficient |
Modest diversification
The 3 months correlation between FuelCell and Lindsell is 0.21. Overlapping area represents the amount of risk that can be diversified away by holding FuelCell Energy and Lindsell Train Investment in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Lindsell Train Investment and FuelCell 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 FuelCell Energy are associated (or correlated) with Lindsell Train. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Lindsell Train Investment has no effect on the direction of FuelCell Energy i.e., FuelCell Energy and Lindsell Train go up and down completely randomly.
Pair Corralation between FuelCell Energy and Lindsell Train
Assuming the 90 days trading horizon FuelCell Energy is expected to generate 76.22 times more return on investment than Lindsell Train. However, FuelCell Energy is 76.22 times more volatile than Lindsell Train Investment. It trades about 0.1 of its potential returns per unit of risk. Lindsell Train Investment is currently generating about -0.03 per unit of risk. If you would invest 9,330 in FuelCell Energy on October 10, 2024 and sell it today you would lose (8,027) from holding FuelCell Energy or give up 86.03% of portfolio value over 90 days.
Time Period | 3 Months [change] |
Direction | Moves Together |
Strength | Very Weak |
Accuracy | 99.6% |
Values | Daily Returns |
FuelCell Energy vs. Lindsell Train Investment
Performance |
Timeline |
FuelCell Energy |
Lindsell Train Investment |
FuelCell Energy and Lindsell Train Volatility Contrast
Predicted Return Density |
Returns |
Pair Trading with FuelCell Energy and Lindsell Train
The main advantage of trading using opposite FuelCell Energy and Lindsell Train positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if FuelCell Energy position performs unexpectedly, Lindsell Train 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 Lindsell Train will offset losses from the drop in Lindsell Train's long position.FuelCell Energy vs. Symphony Environmental Technologies | FuelCell Energy vs. URU Metals | FuelCell Energy vs. First Class Metals | FuelCell Energy vs. Thor Mining PLC |
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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 Pair Correlation module to compare performance and examine fundamental relationship between any two equity instruments.
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