Correlation Between Fluence Energy and Mass Megawat

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

By analyzing existing cross correlation between Fluence Energy and Mass Megawat Wind, you can compare the effects of market volatilities on Fluence Energy and Mass Megawat 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 Fluence Energy with a short position of Mass Megawat. Check out your portfolio center. Please also check ongoing floating volatility patterns of Fluence Energy and Mass Megawat.

Diversification Opportunities for Fluence Energy and Mass Megawat

0.06

Correlation Coefficient

Fluence Energy  Mass Megawat

Significant diversification

The 3 months correlation between Fluence and Mass is 0.06. Overlapping area represents the amount of risk that can be diversified away by holding Fluence Energy and Mass Megawat Wind in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Mass Megawat Wind and Fluence 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 Fluence Energy are associated (or correlated) with Mass Megawat. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Mass Megawat Wind has no effect on the direction of Fluence Energy i.e., Fluence Energy and Mass Megawat go up and down completely randomly.

Pair Corralation between Fluence Energy and Mass Megawat

Given the investment horizon of 90 days Fluence Energy is expected to under-perform the Mass Megawat. But the stock apears to be less risky and, when comparing its historical volatility, Fluence Energy is 14.74 times less risky than Mass Megawat. The stock trades about 0.0 of its potential returns per unit of risk. The Mass Megawat Wind is currently generating about 0.08 of returns per unit of risk over similar time horizon. If you would invest  81.00  in Mass Megawat Wind on October 2, 2024 and sell it today you would lose (50.00) from holding Mass Megawat Wind or give up 61.73% of portfolio value over 90 days.

Time Period	3 Months [change]
Direction	Moves Together
Strength	Insignificant
Accuracy	99.2%
Values	Daily Returns

Fluence Energy  vs.  Mass Megawat Wind

Fluence Energy

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Fluence Energy has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of uncertain performance in the last few months, the Stock's basic indicators remain rather sound which may send shares a bit higher in January 2025. The latest tumult may also be a sign of longer-term up-swing for the firm shareholders.

Mass Megawat Wind

Risk-Adjusted Performance

10 of 100

OK

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

Pair Trading with Fluence Energy and Mass Megawat

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

The idea behind Fluence Energy and Mass Megawat Wind 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 Equity Forecasting module to use basic forecasting models to generate price predictions and determine price momentum.