Correlation Between Polar Power and Bloom Energy

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

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

Diversification Opportunities for Polar Power and Bloom Energy

0.13

Correlation Coefficient

Polar Power  Bloom Energy

Average diversification

The 3 months correlation between Polar and Bloom is 0.13. Overlapping area represents the amount of risk that can be diversified away by holding Polar Power and Bloom Energy Corp in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Bloom Energy Corp and Polar Power 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 Polar Power are associated (or correlated) with Bloom Energy. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Bloom Energy Corp has no effect on the direction of Polar Power i.e., Polar Power and Bloom Energy go up and down completely randomly.

Pair Corralation between Polar Power and Bloom Energy

Given the investment horizon of 90 days Polar Power is expected to generate 1.42 times less return on investment than Bloom Energy. In addition to that, Polar Power is 1.24 times more volatile than Bloom Energy Corp. It trades about 0.01 of its total potential returns per unit of risk. Bloom Energy Corp is currently generating about 0.02 per unit of volatility. If you would invest  2,290  in Bloom Energy Corp on December 27, 2024 and sell it today you would lose (62.00) from holding Bloom Energy Corp or give up 2.71% of portfolio value over 90 days.

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

Polar Power  vs.  Bloom Energy Corp

Polar Power

Risk-Adjusted Performance

Very Weak

Over the last 90 days Polar Power has generated negative risk-adjusted returns adding no value to investors with long positions. Despite somewhat strong essential indicators, Polar Power is not utilizing all of its potentials. The newest stock price disturbance, may contribute to short-term losses for the investors.

Bloom Energy Corp

Risk-Adjusted Performance

Very Weak

Compared to the overall equity markets, risk-adjusted returns on investments in Bloom Energy Corp are ranked lower than 1 (%) of all global equities and portfolios over the last 90 days. In spite of rather fragile technical and fundamental indicators, Bloom Energy may actually be approaching a critical reversion point that can send shares even higher in April 2025.

Pair Trading with Polar Power and Bloom Energy

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

The idea behind Polar Power and Bloom Energy Corp 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 Performance Analysis module to check effects of mean-variance optimization against your current asset allocation.