Correlation Between FuelCell Energy and Espey Mfg

Specify exactly 2 symbols:
Can any of the company-specific risk be diversified away by investing in both FuelCell Energy and Espey Mfg 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 FuelCell Energy and Espey Mfg into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between FuelCell Energy and Espey Mfg Electronics, you can compare the effects of market volatilities on FuelCell Energy and Espey Mfg 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 FuelCell Energy with a short position of Espey Mfg. Check out your portfolio center. Please also check ongoing floating volatility patterns of FuelCell Energy and Espey Mfg.

Diversification Opportunities for FuelCell Energy and Espey Mfg

0.24
  Correlation Coefficient

Modest diversification

The 3 months correlation between FuelCell and Espey is 0.24. Overlapping area represents the amount of risk that can be diversified away by holding FuelCell Energy and Espey Mfg Electronics in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Espey Mfg Electronics and FuelCell 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 FuelCell Energy are associated (or correlated) with Espey Mfg. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Espey Mfg Electronics has no effect on the direction of FuelCell Energy i.e., FuelCell Energy and Espey Mfg go up and down completely randomly.

Pair Corralation between FuelCell Energy and Espey Mfg

Given the investment horizon of 90 days FuelCell Energy is expected to under-perform the Espey Mfg. In addition to that, FuelCell Energy is 2.3 times more volatile than Espey Mfg Electronics. It trades about -0.17 of its total potential returns per unit of risk. Espey Mfg Electronics is currently generating about -0.09 per unit of volatility. If you would invest  2,991  in Espey Mfg Electronics on November 28, 2024 and sell it today you would lose (389.00) from holding Espey Mfg Electronics or give up 13.01% of portfolio value over 90 days.
Time Period3 Months [change]
DirectionMoves Together 
StrengthVery Weak
Accuracy100.0%
ValuesDaily Returns

FuelCell Energy  vs.  Espey Mfg Electronics

 Performance 
       Timeline  
FuelCell Energy 

Risk-Adjusted Performance

Very Weak

 
Weak
 
Strong
Over the last 90 days FuelCell Energy has generated negative risk-adjusted returns adding no value to investors with long positions. Despite unsteady performance in the last few months, the Stock's technical and fundamental indicators remain quite persistent which may send shares a bit higher in March 2025. The latest mess may also be a sign of long-standing up-swing for the company institutional investors.
Espey Mfg Electronics 

Risk-Adjusted Performance

Very Weak

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

FuelCell Energy and Espey Mfg Volatility Contrast

   Predicted Return Density   
       Returns  

Pair Trading with FuelCell Energy and Espey Mfg

The main advantage of trading using opposite FuelCell Energy and Espey Mfg positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if FuelCell Energy position performs unexpectedly, Espey Mfg 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 Espey Mfg will offset losses from the drop in Espey Mfg's long position.
The idea behind FuelCell Energy and Espey Mfg Electronics 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 AI Portfolio Architect module to use AI to generate optimal portfolios and find profitable investment opportunities.

Other Complementary Tools

Money Managers
Screen money managers from public funds and ETFs managed around the world
Equity Search
Search for actively traded equities including funds and ETFs from over 30 global markets
Headlines Timeline
Stay connected to all market stories and filter out noise. Drill down to analyze hype elasticity
Portfolio Volatility
Check portfolio volatility and analyze historical return density to properly model market risk
Transaction History
View history of all your transactions and understand their impact on performance