Correlation Between Energy Vault and NEP Old

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

Diversification Opportunities for Energy Vault and NEP Old

0.47

Correlation Coefficient

Energy Vault  NEP Old

Very weak diversification

The 3 months correlation between Energy and NEP is 0.47. Overlapping area represents the amount of risk that can be diversified away by holding Energy Vault Holdings and NEP Old in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on NEP Old 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 NEP Old. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of NEP Old has no effect on the direction of Energy Vault i.e., Energy Vault and NEP Old go up and down completely randomly.

Pair Corralation between Energy Vault and NEP Old

Given the investment horizon of 90 days Energy Vault Holdings is expected to generate 1.04 times more return on investment than NEP Old. However, Energy Vault is 1.04 times more volatile than NEP Old. It trades about -0.29 of its potential returns per unit of risk. NEP Old is currently generating about -0.33 per unit of risk. If you would invest  247.00  in Energy Vault Holdings on December 28, 2024 and sell it today you would lose (176.00) from holding Energy Vault Holdings or give up 71.26% of portfolio value over 90 days.

Time Period	3 Months [change]
Direction	Moves Together
Strength	Weak
Accuracy	37.7%
Values	Daily Returns

Energy Vault Holdings  vs.  NEP Old

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 weak 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.

NEP Old

Risk-Adjusted Performance

Very Weak

Over the last 90 days NEP Old has generated negative risk-adjusted returns adding no value to investors with long positions. Even with unsteady performance in the last few months, the Stock's technical and fundamental indicators remain relatively invariable which may send shares a bit higher in April 2025. The latest agitation may also be a sign of long-running up-swing for the enterprise retail investors.

Pair Trading with Energy Vault and NEP Old

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

The idea behind Energy Vault Holdings and NEP Old 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 Bonds Directory module to find actively traded corporate debentures issued by US companies.