Correlation Between Bloom Energy and Boeing

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

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

Diversification Opportunities for Bloom Energy and Boeing

-0.34

Correlation Coefficient

Bloom Energy  Boeing

Very good diversification

The 3 months correlation between Bloom and Boeing is -0.34. Overlapping area represents the amount of risk that can be diversified away by holding Bloom Energy Corp and The Boeing in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Boeing and Bloom Energy 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 Bloom Energy Corp are associated (or correlated) with Boeing. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Boeing has no effect on the direction of Bloom Energy i.e., Bloom Energy and Boeing go up and down completely randomly.

Pair Corralation between Bloom Energy and Boeing

Allowing for the 90-day total investment horizon Bloom Energy Corp is expected to generate 2.53 times more return on investment than Boeing. However, Bloom Energy is 2.53 times more volatile than The Boeing. It trades about 0.03 of its potential returns per unit of risk. The Boeing is currently generating about -0.01 per unit of risk. If you would invest  2,326  in Bloom Energy Corp on September 4, 2024 and sell it today you would earn a total of  288.00  from holding Bloom Energy Corp or generate 12.38% return on investment over 90 days.

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

Bloom Energy Corp  vs.  The Boeing

Bloom Energy Corp

Risk-Adjusted Performance

14 of 100

Good

Compared to the overall equity markets, risk-adjusted returns on investments in Bloom Energy Corp are ranked lower than 14 (%) of all global equities and portfolios over the last 90 days. In spite of rather fragile technical and fundamental indicators, Bloom Energy exhibited solid returns over the last few months and may actually be approaching a breakup point.

Boeing

Risk-Adjusted Performance

0 of 100

Very Weak

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

Pair Trading with Bloom Energy and Boeing

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

The idea behind Bloom Energy Corp and The Boeing 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 Portfolio Dashboard module to portfolio dashboard that provides centralized access to all your investments.