Correlation Between Energy Vault and Enlight Renewable

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

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

Diversification Opportunities for Energy Vault and Enlight Renewable

0.2

Correlation Coefficient

Energy Vault  Enlight Renewable

Modest diversification

The 3 months correlation between Energy and Enlight is 0.2. Overlapping area represents the amount of risk that can be diversified away by holding Energy Vault Holdings and Enlight Renewable Energy in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Enlight Renewable Energy and Energy Vault 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 Energy Vault Holdings are associated (or correlated) with Enlight Renewable. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Enlight Renewable Energy has no effect on the direction of Energy Vault i.e., Energy Vault and Enlight Renewable go up and down completely randomly.

Pair Corralation between Energy Vault and Enlight Renewable

Given the investment horizon of 90 days Energy Vault Holdings is expected to under-perform the Enlight Renewable. In addition to that, Energy Vault is 2.87 times more volatile than Enlight Renewable Energy. It trades about -0.29 of its total potential returns per unit of risk. Enlight Renewable Energy is currently generating about -0.03 per unit of volatility. If you would invest  1,715  in Enlight Renewable Energy on December 29, 2024 and sell it today you would lose (96.00) from holding Enlight Renewable Energy or give up 5.6% of portfolio value over 90 days.

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

Energy Vault Holdings  vs.  Enlight Renewable Energy

Energy Vault Holdings

Risk-Adjusted Performance

Very Weak

Over the last 90 days Energy Vault Holdings 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 technical and fundamental indicators remain fairly stable which may send shares a bit higher in April 2025. The latest fuss may also be a sign of long-term up-swing for the venture sophisticated investors.

Enlight Renewable Energy

Risk-Adjusted Performance

Very Weak

Over the last 90 days Enlight Renewable Energy has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of comparatively stable essential indicators, Enlight Renewable is not utilizing all of its potentials. The recent stock price uproar, may contribute to short-horizon losses for the private investors.

Pair Trading with Energy Vault and Enlight Renewable

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

The idea behind Energy Vault Holdings and Enlight Renewable Energy 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 Bond Analysis module to evaluate and analyze corporate bonds as a potential investment for your portfolios..