Correlation Between Energy Vault and GE Vernova

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

Diversification Opportunities for Energy Vault and GE Vernova

0.8

Correlation Coefficient

Energy Vault  GE Vernova

Very poor diversification

The 3 months correlation between Energy and GEV is 0.8. Overlapping area represents the amount of risk that can be diversified away by holding Energy Vault Holdings and GE Vernova LLC in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on GE Vernova LLC 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 GE Vernova. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of GE Vernova LLC has no effect on the direction of Energy Vault i.e., Energy Vault and GE Vernova go up and down completely randomly.

Pair Corralation between Energy Vault and GE Vernova

Given the investment horizon of 90 days Energy Vault is expected to generate 1.02 times less return on investment than GE Vernova. In addition to that, Energy Vault is 2.95 times more volatile than GE Vernova LLC. It trades about 0.06 of its total potential returns per unit of risk. GE Vernova LLC is currently generating about 0.18 per unit of volatility. If you would invest  29,760  in GE Vernova LLC on August 31, 2024 and sell it today you would earn a total of  3,773  from holding GE Vernova LLC or generate 12.68% return on investment over 90 days.

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

Energy Vault Holdings  vs.  GE Vernova LLC

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.

GE Vernova LLC

Risk-Adjusted Performance

28 of 100

Solid

Compared to the overall equity markets, risk-adjusted returns on investments in GE Vernova LLC are ranked lower than 28 (%) of all global equities and portfolios over the last 90 days. In spite of fairly unsteady technical and fundamental indicators, GE Vernova showed solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with Energy Vault and GE Vernova

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

The idea behind Energy Vault Holdings and GE Vernova LLC 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 Portfolio Suggestion module to get suggestions outside of your existing asset allocation including your own model portfolios.