Correlation Between Fluence Energy and Eco Wave

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

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

Diversification Opportunities for Fluence Energy and Eco Wave

0.73

Correlation Coefficient

Fluence Energy  Eco Wave

Poor diversification

The 3 months correlation between Fluence and Eco is 0.73. Overlapping area represents the amount of risk that can be diversified away by holding Fluence Energy and Eco Wave Power in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Eco Wave Power 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 Eco Wave. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Eco Wave Power has no effect on the direction of Fluence Energy i.e., Fluence Energy and Eco Wave go up and down completely randomly.

Pair Corralation between Fluence Energy and Eco Wave

Given the investment horizon of 90 days Fluence Energy is expected to under-perform the Eco Wave. In addition to that, Fluence Energy is 1.21 times more volatile than Eco Wave Power. It trades about -0.22 of its total potential returns per unit of risk. Eco Wave Power is currently generating about -0.13 per unit of volatility. If you would invest  1,210  in Eco Wave Power on December 28, 2024 and sell it today you would lose (530.00) from holding Eco Wave Power or give up 43.8% of portfolio value over 90 days.

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

Fluence Energy  vs.  Eco Wave Power

Fluence Energy

Risk-Adjusted Performance

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 April 2025. The latest tumult may also be a sign of longer-term up-swing for the firm shareholders.

Eco Wave Power

Risk-Adjusted Performance

Very Weak

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

Pair Trading with Fluence Energy and Eco Wave

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

The idea behind Fluence Energy and Eco Wave 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 Idea Breakdown module to analyze constituents of all Macroaxis ideas. Macroaxis investment ideas are predefined, sector-focused investing themes.