Correlation Between Fluence Energy and Palo Alto

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

By analyzing existing cross correlation between Fluence Energy and Palo Alto Networks, you can compare the effects of market volatilities on Fluence Energy and Palo Alto 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 Palo Alto. Check out your portfolio center. Please also check ongoing floating volatility patterns of Fluence Energy and Palo Alto.

Diversification Opportunities for Fluence Energy and Palo Alto

-0.52

Correlation Coefficient

Fluence Energy  Palo Alto

Excellent diversification

The 3 months correlation between Fluence and Palo is -0.52. Overlapping area represents the amount of risk that can be diversified away by holding Fluence Energy and Palo Alto Networks in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Palo Alto Networks 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 Palo Alto. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Palo Alto Networks has no effect on the direction of Fluence Energy i.e., Fluence Energy and Palo Alto go up and down completely randomly.

Pair Corralation between Fluence Energy and Palo Alto

Given the investment horizon of 90 days Fluence Energy is expected to under-perform the Palo Alto. In addition to that, Fluence Energy is 1.67 times more volatile than Palo Alto Networks. It trades about -0.01 of its total potential returns per unit of risk. Palo Alto Networks is currently generating about 0.05 per unit of volatility. If you would invest  14,446  in Palo Alto Networks on September 25, 2024 and sell it today you would earn a total of  4,497  from holding Palo Alto Networks or generate 31.13% return on investment over 90 days.

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

Fluence Energy  vs.  Palo Alto Networks

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 abnormal 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.

Palo Alto Networks

Risk-Adjusted Performance

6 of 100

Modest

Compared to the overall equity markets, risk-adjusted returns on investments in Palo Alto Networks are ranked lower than 6 (%) of all global equities and portfolios over the last 90 days. In spite of fairly uncertain basic indicators, Palo Alto may actually be approaching a critical reversion point that can send shares even higher in January 2025.

Pair Trading with Fluence Energy and Palo Alto

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

The idea behind Fluence Energy and Palo Alto Networks 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 Positions Ratings module to determine portfolio positions ratings based on digital equity recommendations. Macroaxis instant position ratings are based on combination of fundamental analysis and risk-adjusted market performance.