Correlation Between Eos Energy and Flux Power

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

By analyzing existing cross correlation between Eos Energy Enterprises and Flux Power Holdings, you can compare the effects of market volatilities on Eos Energy and Flux Power 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 Eos Energy with a short position of Flux Power. Check out your portfolio center. Please also check ongoing floating volatility patterns of Eos Energy and Flux Power.

Diversification Opportunities for Eos Energy and Flux Power

0.5

Correlation Coefficient

Eos Energy  Flux Power

Very weak diversification

The 3 months correlation between Eos and Flux is 0.5. Overlapping area represents the amount of risk that can be diversified away by holding Eos Energy Enterprises and Flux Power Holdings in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Flux Power Holdings and Eos 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 Eos Energy Enterprises are associated (or correlated) with Flux Power. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Flux Power Holdings has no effect on the direction of Eos Energy i.e., Eos Energy and Flux Power go up and down completely randomly.

Pair Corralation between Eos Energy and Flux Power

Given the investment horizon of 90 days Eos Energy Enterprises is expected to under-perform the Flux Power. But the stock apears to be less risky and, when comparing its historical volatility, Eos Energy Enterprises is 1.05 times less risky than Flux Power. The stock trades about -0.02 of its potential returns per unit of risk. The Flux Power Holdings is currently generating about 0.07 of returns per unit of risk over similar time horizon. If you would invest  167.00  in Flux Power Holdings on December 27, 2024 and sell it today you would earn a total of  27.00  from holding Flux Power Holdings or generate 16.17% return on investment over 90 days.

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

Eos Energy Enterprises  vs.  Flux Power Holdings

Eos Energy Enterprises

Risk-Adjusted Performance

Very Weak

Over the last 90 days Eos Energy Enterprises has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of latest weak performance, the Stock's basic indicators remain sound and the latest tumult on Wall Street may also be a sign of longer-term gains for the firm shareholders.

Flux Power Holdings

Risk-Adjusted Performance

Modest

Compared to the overall equity markets, risk-adjusted returns on investments in Flux Power Holdings are ranked lower than 5 (%) of all global equities and portfolios over the last 90 days. In spite of fairly weak basic indicators, Flux Power showed solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with Eos Energy and Flux Power

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

The idea behind Eos Energy Enterprises and Flux Power Holdings 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 Analyzer module to portfolio analysis module that provides access to portfolio diagnostics and optimization engine.