Correlation Between Bloom Energy and GrafTech International

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

Diversification Opportunities for Bloom Energy and GrafTech International

0.48

Correlation Coefficient

Bloom Energy  GrafTech International

Very weak diversification

The 3 months correlation between Bloom and GrafTech is 0.48. Overlapping area represents the amount of risk that can be diversified away by holding Bloom Energy Corp and GrafTech International in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on GrafTech International 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 GrafTech International. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of GrafTech International has no effect on the direction of Bloom Energy i.e., Bloom Energy and GrafTech International go up and down completely randomly.

Pair Corralation between Bloom Energy and GrafTech International

Allowing for the 90-day total investment horizon Bloom Energy is expected to generate 1.15 times less return on investment than GrafTech International. In addition to that, Bloom Energy is 1.4 times more volatile than GrafTech International. It trades about 0.2 of its total potential returns per unit of risk. GrafTech International is currently generating about 0.32 per unit of volatility. If you would invest  65.00  in GrafTech International on August 31, 2024 and sell it today you would earn a total of  138.00  from holding GrafTech International or generate 212.31% return on investment over 90 days.

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

Bloom Energy Corp  vs.  GrafTech International

Bloom Energy Corp

Risk-Adjusted Performance

15 of 100

Good

Compared to the overall equity markets, risk-adjusted returns on investments in Bloom Energy Corp are ranked lower than 15 (%) of all global equities and portfolios over the last 90 days. In spite of rather fragile technical and fundamental indicators, Bloom Energy exhibited solid returns over the last few months and may actually be approaching a breakup point.

GrafTech International

Risk-Adjusted Performance

25 of 100

Solid

Compared to the overall equity markets, risk-adjusted returns on investments in GrafTech International are ranked lower than 25 (%) of all global equities and portfolios over the last 90 days. Despite nearly unsteady basic indicators, GrafTech International reported solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with Bloom Energy and GrafTech International

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

The idea behind Bloom Energy Corp and GrafTech International 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 Portfolio Manager module to state of the art Portfolio Manager to monitor and improve performance of your invested capital.