Correlation Between Bloom Energy and Dmc Global

Can any of the company-specific risk be diversified away by investing in both Bloom Energy and Dmc Global 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 Dmc Global 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 Dmc Global, you can compare the effects of market volatilities on Bloom Energy and Dmc Global 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 Dmc Global. Check out your portfolio center. Please also check ongoing floating volatility patterns of Bloom Energy and Dmc Global.

Diversification Opportunities for Bloom Energy and Dmc Global

-0.81

Correlation Coefficient

Bloom Energy  Dmc Global

Pay attention - limited upside

The 3 months correlation between Bloom and Dmc is -0.81. Overlapping area represents the amount of risk that can be diversified away by holding Bloom Energy Corp and Dmc Global in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Dmc Global 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 Dmc Global. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Dmc Global has no effect on the direction of Bloom Energy i.e., Bloom Energy and Dmc Global go up and down completely randomly.

Pair Corralation between Bloom Energy and Dmc Global

Allowing for the 90-day total investment horizon Bloom Energy Corp is expected to generate 1.43 times more return on investment than Dmc Global. However, Bloom Energy is 1.43 times more volatile than Dmc Global. It trades about -0.06 of its potential returns per unit of risk. Dmc Global is currently generating about -0.12 per unit of risk. If you would invest  2,576  in Bloom Energy Corp on September 23, 2024 and sell it today you would lose (164.00) from holding Bloom Energy Corp or give up 6.37% of portfolio value over 90 days.

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

Bloom Energy Corp  vs.  Dmc Global

Bloom Energy Corp

Risk-Adjusted Performance

13 of 100

Good

Compared to the overall equity markets, risk-adjusted returns on investments in Bloom Energy Corp are ranked lower than 13 (%) of all global equities and portfolios over the last 90 days. In spite of rather uncertain technical and fundamental indicators, Bloom Energy exhibited solid returns over the last few months and may actually be approaching a breakup point.

Dmc Global

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Dmc Global has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of weak performance in the last few months, the Stock's basic indicators remain very healthy which may send shares a bit higher in January 2025. The recent disarray may also be a sign of long period up-swing for the firm investors.

Pair Trading with Bloom Energy and Dmc Global

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

The idea behind Bloom Energy Corp and Dmc 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 Correlation Analysis module to reduce portfolio risk simply by holding instruments which are not perfectly correlated.