Correlation Between Solid Power and Hubbell

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

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

Diversification Opportunities for Solid Power and Hubbell

0.76

Correlation Coefficient

Solid Power  Hubbell

Poor diversification

The 3 months correlation between Solid and Hubbell is 0.76. Overlapping area represents the amount of risk that can be diversified away by holding Solid Power and Hubbell in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Hubbell and Solid 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 Solid Power are associated (or correlated) with Hubbell. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Hubbell has no effect on the direction of Solid Power i.e., Solid Power and Hubbell go up and down completely randomly.

Pair Corralation between Solid Power and Hubbell

Given the investment horizon of 90 days Solid Power is expected to under-perform the Hubbell. In addition to that, Solid Power is 2.02 times more volatile than Hubbell. It trades about -0.24 of its total potential returns per unit of risk. Hubbell is currently generating about -0.17 per unit of volatility. If you would invest  41,769  in Hubbell on December 28, 2024 and sell it today you would lose (8,568) from holding Hubbell or give up 20.51% of portfolio value over 90 days.

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

Solid Power  vs.  Hubbell

Solid Power

Risk-Adjusted Performance

Very Weak

Over the last 90 days Solid Power has generated negative risk-adjusted returns adding no value to investors with long positions. Even with fragile performance in the last few months, the Stock's 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.

Hubbell

Risk-Adjusted Performance

Very Weak

Over the last 90 days Hubbell has generated negative risk-adjusted returns adding no value to investors with long positions. Despite uncertain performance in the last few months, the Stock's fundamental drivers remain somewhat strong which may send shares a bit higher in April 2025. The current disturbance may also be a sign of long term up-swing for the company investors.

Pair Trading with Solid Power and Hubbell

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

The idea behind Solid Power and Hubbell 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 Money Flow Index module to determine momentum by analyzing Money Flow Index and other technical indicators.