Correlation Between Excelerate Energy and Fusion Fuel

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

By analyzing existing cross correlation between Excelerate Energy and Fusion Fuel Green, you can compare the effects of market volatilities on Excelerate Energy and Fusion Fuel 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 Excelerate Energy with a short position of Fusion Fuel. Check out your portfolio center. Please also check ongoing floating volatility patterns of Excelerate Energy and Fusion Fuel.

Diversification Opportunities for Excelerate Energy and Fusion Fuel

0.49

Correlation Coefficient

Excelerate Energy  Fusion Fuel

Very weak diversification

The 3 months correlation between Excelerate and Fusion is 0.49. Overlapping area represents the amount of risk that can be diversified away by holding Excelerate Energy and Fusion Fuel Green in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Fusion Fuel Green and Excelerate 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 Excelerate Energy are associated (or correlated) with Fusion Fuel. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Fusion Fuel Green has no effect on the direction of Excelerate Energy i.e., Excelerate Energy and Fusion Fuel go up and down completely randomly.

Pair Corralation between Excelerate Energy and Fusion Fuel

Allowing for the 90-day total investment horizon Excelerate Energy is expected to under-perform the Fusion Fuel. But the stock apears to be less risky and, when comparing its historical volatility, Excelerate Energy is 6.93 times less risky than Fusion Fuel. The stock trades about -0.03 of its potential returns per unit of risk. The Fusion Fuel Green is currently generating about 0.0 of returns per unit of risk over similar time horizon. If you would invest  2.25  in Fusion Fuel Green on December 30, 2024 and sell it today you would lose (1.35) from holding Fusion Fuel Green or give up 60.0% of portfolio value over 90 days.

Time Period	3 Months [change]
Direction	Moves Together
Strength	Weak
Accuracy	98.39%
Values	Daily Returns

Excelerate Energy  vs.  Fusion Fuel Green

Excelerate Energy

Risk-Adjusted Performance

Very Weak

Over the last 90 days Excelerate Energy has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of rather sound technical and fundamental indicators, Excelerate Energy is not utilizing all of its potentials. The current stock price tumult, may contribute to shorter-term losses for the shareholders.

Fusion Fuel Green

Risk-Adjusted Performance

Very Weak

Over the last 90 days Fusion Fuel Green has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of fairly stable basic indicators, Fusion Fuel is not utilizing all of its potentials. The recent stock price fuss, may contribute to near-short-term losses for the sophisticated investors.

Pair Trading with Excelerate Energy and Fusion Fuel

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

The idea behind Excelerate Energy and Fusion Fuel Green 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 Premium Stories module to follow Macroaxis premium stories from verified contributors across different equity types, categories and coverage scope.