Correlation Between Eos Energy and Hubbell

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

Diversification Opportunities for Eos Energy and Hubbell

-0.5

Correlation Coefficient

Eos Energy  Hubbell

Very good diversification

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

Pair Corralation between Eos Energy and Hubbell

Given the investment horizon of 90 days Eos Energy Enterprises is expected to under-perform the Hubbell. In addition to that, Eos Energy is 3.08 times more volatile than Hubbell. It trades about -0.36 of its total potential returns per unit of risk. Hubbell is currently generating about -0.35 per unit of volatility. If you would invest  41,453  in Hubbell on November 28, 2024 and sell it today you would lose (4,232) from holding Hubbell or give up 10.21% of portfolio value over 90 days.

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

Eos Energy Enterprises  vs.  Hubbell

Eos Energy Enterprises

Risk-Adjusted Performance

Good

Compared to the overall equity markets, risk-adjusted returns on investments in Eos Energy Enterprises are ranked lower than 9 (%) of all global equities and portfolios over the last 90 days. In spite of rather weak basic indicators, Eos Energy exhibited solid returns over the last few months and may actually be approaching a breakup point.

Hubbell

Risk-Adjusted Performance

Very Weak

Over the last 90 days Hubbell has generated negative risk-adjusted returns adding no value to investors with long positions. Despite uncertain performance in the last few months, the Stock's fundamental drivers remain somewhat strong which may send shares a bit higher in March 2025. The current disturbance may also be a sign of long term up-swing for the company investors.

Pair Trading with Eos Energy and Hubbell

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

The idea behind Eos Energy Enterprises and Hubbell 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 Portfolio Comparator module to compare the composition, asset allocations and performance of any two portfolios in your account.