Correlation Between Flux Power and Eos Energy

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

By analyzing existing cross correlation between Flux Power Holdings and Eos Energy Enterprises, you can compare the effects of market volatilities on Flux Power and Eos Energy 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 Flux Power with a short position of Eos Energy. Check out your portfolio center. Please also check ongoing floating volatility patterns of Flux Power and Eos Energy.

Diversification Opportunities for Flux Power and Eos Energy

0.5

Correlation Coefficient

Flux Power  Eos Energy

Very weak diversification

The 3 months correlation between Flux and Eos is 0.5. Overlapping area represents the amount of risk that can be diversified away by holding Flux Power Holdings and Eos Energy Enterprises in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Eos Energy Enterprises and Flux Power 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 Flux Power Holdings are associated (or correlated) with Eos Energy. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Eos Energy Enterprises has no effect on the direction of Flux Power i.e., Flux Power and Eos Energy go up and down completely randomly.

Pair Corralation between Flux Power and Eos Energy

Given the investment horizon of 90 days Flux Power Holdings is expected to generate 1.05 times more return on investment than Eos Energy. However, Flux Power is 1.05 times more volatile than Eos Energy Enterprises. It trades about 0.07 of its potential returns per unit of risk. Eos Energy Enterprises is currently generating about -0.02 per unit of risk. If you would invest  167.00  in Flux Power Holdings on December 27, 2024 and sell it today you would earn a total of  27.00  from holding Flux Power Holdings or generate 16.17% return on investment over 90 days.

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

Flux Power Holdings  vs.  Eos Energy Enterprises

Flux Power Holdings

Risk-Adjusted Performance

Modest

Compared to the overall equity markets, risk-adjusted returns on investments in Flux Power Holdings are ranked lower than 5 (%) of all global equities and portfolios over the last 90 days. In spite of fairly weak basic indicators, Flux Power showed solid returns over the last few months and may actually be approaching a breakup point.

Eos Energy Enterprises

Risk-Adjusted Performance

Very Weak

Over the last 90 days Eos Energy Enterprises has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of latest weak performance, the Stock's basic indicators remain sound and the latest tumult on Wall Street may also be a sign of longer-term gains for the firm shareholders.

Pair Trading with Flux Power and Eos Energy

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

The idea behind Flux Power Holdings and Eos Energy Enterprises 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 Portfolio File Import module to quickly import all of your third-party portfolios from your local drive in csv format.