Correlation Between Eos Energy and NeoVolta Common

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

Diversification Opportunities for Eos Energy and NeoVolta Common

-0.56

Correlation Coefficient

Eos Energy  NeoVolta Common

Excellent diversification

The 3 months correlation between Eos and NeoVolta is -0.56. Overlapping area represents the amount of risk that can be diversified away by holding Eos Energy Enterprises and NeoVolta Common Stock in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on NeoVolta Common Stock 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 NeoVolta Common. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of NeoVolta Common Stock has no effect on the direction of Eos Energy i.e., Eos Energy and NeoVolta Common go up and down completely randomly.

Pair Corralation between Eos Energy and NeoVolta Common

Given the investment horizon of 90 days Eos Energy Enterprises is expected to under-perform the NeoVolta Common. But the stock apears to be less risky and, when comparing its historical volatility, Eos Energy Enterprises is 1.02 times less risky than NeoVolta Common. The stock trades about -0.29 of its potential returns per unit of risk. The NeoVolta Common Stock is currently generating about -0.05 of returns per unit of risk over similar time horizon. If you would invest  326.00  in NeoVolta Common Stock on November 28, 2024 and sell it today you would lose (22.00) from holding NeoVolta Common Stock or give up 6.75% 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.  NeoVolta Common Stock

Eos Energy Enterprises

Risk-Adjusted Performance

OK

Compared to the overall equity markets, risk-adjusted returns on investments in Eos Energy Enterprises are ranked lower than 10 (%) 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.

NeoVolta Common Stock

Risk-Adjusted Performance

Very Weak

Over the last 90 days NeoVolta Common Stock has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of weak performance in the last few months, the Stock's basic indicators remain fairly stable which may send shares a bit higher in March 2025. The latest fuss may also be a sign of long-term up-swing for the venture sophisticated investors.

Pair Trading with Eos Energy and NeoVolta Common

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

The idea behind Eos Energy Enterprises and NeoVolta Common Stock 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 Idea Breakdown module to analyze constituents of all Macroaxis ideas. Macroaxis investment ideas are predefined, sector-focused investing themes.