Correlation Between Bloom Energy and NeoVolta Warrant

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

Diversification Opportunities for Bloom Energy and NeoVolta Warrant

0.83

Correlation Coefficient

Bloom Energy  NeoVolta Warrant

Very poor diversification

The 3 months correlation between Bloom and NeoVolta is 0.83. Overlapping area represents the amount of risk that can be diversified away by holding Bloom Energy Corp and NeoVolta Warrant in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on NeoVolta Warrant 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 NeoVolta Warrant. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of NeoVolta Warrant has no effect on the direction of Bloom Energy i.e., Bloom Energy and NeoVolta Warrant go up and down completely randomly.

Pair Corralation between Bloom Energy and NeoVolta Warrant

Allowing for the 90-day total investment horizon Bloom Energy Corp is expected to generate 0.35 times more return on investment than NeoVolta Warrant. However, Bloom Energy Corp is 2.89 times less risky than NeoVolta Warrant. It trades about -0.01 of its potential returns per unit of risk. NeoVolta Warrant is currently generating about -0.21 per unit of risk. If you would invest  2,420  in Bloom Energy Corp on October 24, 2024 and sell it today you would lose (28.00) from holding Bloom Energy Corp or give up 1.16% of portfolio value over 90 days.

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

Bloom Energy Corp  vs.  NeoVolta Warrant

Bloom Energy Corp

Risk-Adjusted Performance

17 of 100

Solid

Compared to the overall equity markets, risk-adjusted returns on investments in Bloom Energy Corp are ranked lower than 17 (%) 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.

NeoVolta Warrant

Risk-Adjusted Performance

10 of 100

OK

Compared to the overall equity markets, risk-adjusted returns on investments in NeoVolta Warrant are ranked lower than 10 (%) of all global equities and portfolios over the last 90 days. In spite of fairly abnormal basic indicators, NeoVolta Warrant showed solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with Bloom Energy and NeoVolta Warrant

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

The idea behind Bloom Energy Corp and NeoVolta Warrant 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 AI Portfolio Architect module to use AI to generate optimal portfolios and find profitable investment opportunities.