Correlation Between EVgo Equity and Solid Power

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

By analyzing existing cross correlation between EVgo Equity Warrants and Solid Power, you can compare the effects of market volatilities on EVgo Equity and Solid 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 EVgo Equity with a short position of Solid Power. Check out your portfolio center. Please also check ongoing floating volatility patterns of EVgo Equity and Solid Power.

Diversification Opportunities for EVgo Equity and Solid Power

-0.3

Correlation Coefficient

EVgo Equity  Solid Power

Very good diversification

The 3 months correlation between EVgo and Solid is -0.3. Overlapping area represents the amount of risk that can be diversified away by holding EVgo Equity Warrants and Solid Power in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Solid Power and EVgo Equity 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 EVgo Equity Warrants are associated (or correlated) with Solid Power. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Solid Power has no effect on the direction of EVgo Equity i.e., EVgo Equity and Solid Power go up and down completely randomly.

Pair Corralation between EVgo Equity and Solid Power

Assuming the 90 days horizon EVgo Equity Warrants is expected to generate 6.98 times more return on investment than Solid Power. However, EVgo Equity is 6.98 times more volatile than Solid Power. It trades about 0.14 of its potential returns per unit of risk. Solid Power is currently generating about -0.07 per unit of risk. If you would invest  36.00  in EVgo Equity Warrants on September 15, 2024 and sell it today you would earn a total of  61.00  from holding EVgo Equity Warrants or generate 169.44% return on investment over 90 days.

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

EVgo Equity Warrants  vs.  Solid Power

EVgo Equity Warrants

Risk-Adjusted Performance

10 of 100

OK

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

Solid Power

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Solid Power has generated negative risk-adjusted returns adding no value to investors with long positions. Even with abnormal performance in the last few months, the Stock's fundamental indicators remain relatively invariable which may send shares a bit higher in January 2025. The latest agitation may also be a sign of long-running up-swing for the enterprise retail investors.

Pair Trading with EVgo Equity and Solid Power

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

The idea behind EVgo Equity Warrants and Solid Power 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 Theme Ratings module to determine theme ratings based on digital equity recommendations. Macroaxis theme ratings are based on combination of fundamental analysis and risk-adjusted market performance.