Correlation Between Fluence Energy and SolarWindow Technologies

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

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

Diversification Opportunities for Fluence Energy and SolarWindow Technologies

0.55

Correlation Coefficient

Fluence Energy  SolarWindow Technologies

Very weak diversification

The 3 months correlation between Fluence and SolarWindow is 0.55. Overlapping area represents the amount of risk that can be diversified away by holding Fluence Energy and SolarWindow Technologies in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on SolarWindow Technologies 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 SolarWindow Technologies. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of SolarWindow Technologies has no effect on the direction of Fluence Energy i.e., Fluence Energy and SolarWindow Technologies go up and down completely randomly.

Pair Corralation between Fluence Energy and SolarWindow Technologies

Given the investment horizon of 90 days Fluence Energy is expected to under-perform the SolarWindow Technologies. But the stock apears to be less risky and, when comparing its historical volatility, Fluence Energy is 1.51 times less risky than SolarWindow Technologies. The stock trades about -0.22 of its potential returns per unit of risk. The SolarWindow Technologies is currently generating about 0.03 of returns per unit of risk over similar time horizon. If you would invest  30.00  in SolarWindow Technologies on December 30, 2024 and sell it today you would lose (4.00) from holding SolarWindow Technologies or give up 13.33% of portfolio value over 90 days.

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

Fluence Energy  vs.  SolarWindow Technologies

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.

SolarWindow Technologies

Risk-Adjusted Performance

Weak

Compared to the overall equity markets, risk-adjusted returns on investments in SolarWindow Technologies are ranked lower than 2 (%) of all global equities and portfolios over the last 90 days. In spite of fairly fragile fundamental indicators, SolarWindow Technologies showed solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with Fluence Energy and SolarWindow Technologies

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

The idea behind Fluence Energy and SolarWindow Technologies 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 Balance Of Power module to check stock momentum by analyzing Balance Of Power indicator and other technical ratios.