Correlation Between Energy Vault and Fluence Energy

Can any of the company-specific risk be diversified away by investing in both Energy Vault and Fluence 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 Energy Vault and Fluence Energy 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 Fluence Energy, you can compare the effects of market volatilities on Energy Vault and Fluence 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 Energy Vault with a short position of Fluence Energy. Check out your portfolio center. Please also check ongoing floating volatility patterns of Energy Vault and Fluence Energy.

Diversification Opportunities for Energy Vault and Fluence Energy

0.89

Correlation Coefficient

Energy Vault  Fluence Energy

Very poor diversification

The 3 months correlation between Energy and Fluence is 0.89. Overlapping area represents the amount of risk that can be diversified away by holding Energy Vault Holdings and Fluence Energy in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Fluence 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 Fluence Energy. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Fluence Energy has no effect on the direction of Energy Vault i.e., Energy Vault and Fluence Energy go up and down completely randomly.

Pair Corralation between Energy Vault and Fluence Energy

Given the investment horizon of 90 days Energy Vault Holdings is expected to under-perform the Fluence Energy. But the stock apears to be less risky and, when comparing its historical volatility, Energy Vault Holdings is 1.13 times less risky than Fluence Energy. The stock trades about -0.29 of its potential returns per unit of risk. The Fluence Energy is currently generating about -0.22 of returns per unit of risk over similar time horizon. If you would invest  1,642  in Fluence Energy on December 29, 2024 and sell it today you would lose (1,139) from holding Fluence Energy or give up 69.37% of portfolio value over 90 days.

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

Energy Vault Holdings  vs.  Fluence 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.

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.

Pair Trading with Energy Vault and Fluence Energy

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

The idea behind Energy Vault Holdings and Fluence 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.

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 Holdings module to check your current holdings and cash postion to detemine if your portfolio needs rebalancing.