Correlation Between Heliogen and Energy Vault

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

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

Diversification Opportunities for Heliogen and Energy Vault

-0.44

Correlation Coefficient

Heliogen  Energy Vault

Very good diversification

The 3 months correlation between Heliogen and Energy is -0.44. Overlapping area represents the amount of risk that can be diversified away by holding Heliogen and Energy Vault Holdings in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Energy Vault Holdings and Heliogen 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 Heliogen are associated (or correlated) with Energy Vault. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Energy Vault Holdings has no effect on the direction of Heliogen i.e., Heliogen and Energy Vault go up and down completely randomly.

Pair Corralation between Heliogen and Energy Vault

Given the investment horizon of 90 days Heliogen is expected to under-perform the Energy Vault. In addition to that, Heliogen is 1.07 times more volatile than Energy Vault Holdings. It trades about -0.05 of its total potential returns per unit of risk. Energy Vault Holdings is currently generating about 0.02 per unit of volatility. If you would invest  346.00  in Energy Vault Holdings on August 31, 2024 and sell it today you would lose (140.00) from holding Energy Vault Holdings or give up 40.46% of portfolio value over 90 days.

Time Period	3 Months [change]
Direction	Moves Against
Strength	Very Weak
Accuracy	28.45%
Values	Daily Returns

Heliogen  vs.  Energy Vault Holdings

Heliogen

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Heliogen has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of very healthy technical and fundamental indicators, Heliogen is not utilizing all of its potentials. The latest stock price disarray, may contribute to short-term losses for the investors.

Energy Vault Holdings

Risk-Adjusted Performance

12 of 100

Good

Compared to the overall equity markets, risk-adjusted returns on investments in Energy Vault Holdings are ranked lower than 12 (%) of all global equities and portfolios over the last 90 days. In spite of fairly uncertain technical and fundamental indicators, Energy Vault showed solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with Heliogen and Energy Vault

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

The idea behind Heliogen and Energy Vault Holdings 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 Alpha Finder module to use alpha and beta coefficients to find investment opportunities after accounting for the risk.