Correlation Between Bloom Energy and Icahn Enterprises

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

Diversification Opportunities for Bloom Energy and Icahn Enterprises

-0.58

Correlation Coefficient

Bloom Energy  Icahn Enterprises

Excellent diversification

The 3 months correlation between Bloom and Icahn is -0.58. Overlapping area represents the amount of risk that can be diversified away by holding Bloom Energy Corp and Icahn Enterprises LP in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Icahn 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 Icahn Enterprises. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Icahn Enterprises has no effect on the direction of Bloom Energy i.e., Bloom Energy and Icahn Enterprises go up and down completely randomly.

Pair Corralation between Bloom Energy and Icahn Enterprises

Allowing for the 90-day total investment horizon Bloom Energy Corp is expected to generate 1.79 times more return on investment than Icahn Enterprises. However, Bloom Energy is 1.79 times more volatile than Icahn Enterprises LP. It trades about 0.04 of its potential returns per unit of risk. Icahn Enterprises LP is currently generating about -0.06 per unit of risk. If you would invest  1,739  in Bloom Energy Corp on September 12, 2024 and sell it today you would earn a total of  608.00  from holding Bloom Energy Corp or generate 34.96% return on investment over 90 days.

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

Bloom Energy Corp  vs.  Icahn Enterprises LP

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.

Icahn Enterprises

Risk-Adjusted Performance

2 of 100

Insignificant

Compared to the overall equity markets, risk-adjusted returns on investments in Icahn Enterprises LP are ranked lower than 2 (%) of all global equities and portfolios over the last 90 days. Even with relatively conflicting technical and fundamental indicators, Icahn Enterprises may actually be approaching a critical reversion point that can send shares even higher in January 2025.

Pair Trading with Bloom Energy and Icahn Enterprises

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

The idea behind Bloom Energy Corp and Icahn Enterprises LP 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 Watchlist Optimization module to optimize watchlists to build efficient portfolios or rebalance existing positions based on the mean-variance optimization algorithm.