Correlation Between VERTIV HOLCL and Bloom Energy

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

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

Diversification Opportunities for VERTIV HOLCL and Bloom Energy

0.82

Correlation Coefficient

VERTIV HOLCL  Bloom Energy

Very poor diversification

The 3 months correlation between VERTIV and Bloom is 0.82. Overlapping area represents the amount of risk that can be diversified away by holding VERTIV HOLCL A and Bloom Energy in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Bloom Energy and VERTIV HOLCL 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 VERTIV HOLCL A 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 has no effect on the direction of VERTIV HOLCL i.e., VERTIV HOLCL and Bloom Energy go up and down completely randomly.

Pair Corralation between VERTIV HOLCL and Bloom Energy

Assuming the 90 days horizon VERTIV HOLCL is expected to generate 3.32 times less return on investment than Bloom Energy. But when comparing it to its historical volatility, VERTIV HOLCL A is 2.95 times less risky than Bloom Energy. It trades about 0.14 of its potential returns per unit of risk. Bloom Energy is currently generating about 0.15 of returns per unit of risk over similar time horizon. If you would invest  992.00  in Bloom Energy on September 23, 2024 and sell it today you would earn a total of  1,250  from holding Bloom Energy or generate 126.01% return on investment over 90 days.

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

VERTIV HOLCL A  vs.  Bloom Energy

VERTIV HOLCL A

Risk-Adjusted Performance

10 of 100

OK

Compared to the overall equity markets, risk-adjusted returns on investments in VERTIV HOLCL A are ranked lower than 10 (%) of all global equities and portfolios over the last 90 days. Despite nearly fragile basic indicators, VERTIV HOLCL reported solid returns over the last few months and may actually be approaching a breakup point.

Bloom Energy

Risk-Adjusted Performance

12 of 100

Good

Compared to the overall equity markets, risk-adjusted returns on investments in Bloom Energy are ranked lower than 12 (%) of all global equities and portfolios over the last 90 days. Despite nearly fragile basic indicators, Bloom Energy reported solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with VERTIV HOLCL and Bloom Energy

The main advantage of trading using opposite VERTIV HOLCL and Bloom Energy positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if VERTIV HOLCL 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 VERTIV HOLCL A and Bloom 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.

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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 Positions Ratings module to determine portfolio positions ratings based on digital equity recommendations. Macroaxis instant position ratings are based on combination of fundamental analysis and risk-adjusted market performance.