Correlation Between Bloom Energy and Eos Energy

Can any of the company-specific risk be diversified away by investing in both Bloom Energy and Eos 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 Bloom Energy and Eos Energy 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 Eos Energy Enterprises, you can compare the effects of market volatilities on Bloom Energy and Eos 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 Bloom Energy with a short position of Eos Energy. Check out your portfolio center. Please also check ongoing floating volatility patterns of Bloom Energy and Eos Energy.

Diversification Opportunities for Bloom Energy and Eos Energy

-0.39

Correlation Coefficient

Bloom Energy  Eos Energy

Very good diversification

The 3 months correlation between Bloom and Eos is -0.39. Overlapping area represents the amount of risk that can be diversified away by holding Bloom Energy Corp and Eos Energy Enterprises in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Eos Energy Enterprises 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 Eos Energy. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Eos Energy Enterprises has no effect on the direction of Bloom Energy i.e., Bloom Energy and Eos Energy go up and down completely randomly.

Pair Corralation between Bloom Energy and Eos Energy

Allowing for the 90-day total investment horizon Bloom Energy Corp is expected to generate 0.7 times more return on investment than Eos Energy. However, Bloom Energy Corp is 1.43 times less risky than Eos Energy. It trades about 0.2 of its potential returns per unit of risk. Eos Energy Enterprises is currently generating about 0.08 per unit of risk. If you would invest  1,102  in Bloom Energy Corp on August 31, 2024 and sell it today you would earn a total of  1,619  from holding Bloom Energy Corp or generate 146.91% 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.  Eos Energy Enterprises

Bloom Energy Corp

Risk-Adjusted Performance

15 of 100

Good

Compared to the overall equity markets, risk-adjusted returns on investments in Bloom Energy Corp are ranked lower than 15 (%) 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.

Eos Energy Enterprises

Risk-Adjusted Performance

6 of 100

Modest

Compared to the overall equity markets, risk-adjusted returns on investments in Eos Energy Enterprises are ranked lower than 6 (%) of all global equities and portfolios over the last 90 days. In spite of fairly unsteady technical and fundamental indicators, Eos Energy showed solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with Bloom Energy and Eos Energy

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

The idea behind Bloom Energy Corp and Eos Energy Enterprises 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 Equity Valuation module to check real value of public entities based on technical and fundamental data.