Correlation Between Bloom Energy and Ryder System

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

Diversification Opportunities for Bloom Energy and Ryder System

0.81

Correlation Coefficient

Bloom Energy  Ryder System

Very poor diversification

The 3 months correlation between Bloom and Ryder is 0.81. Overlapping area represents the amount of risk that can be diversified away by holding Bloom Energy Corp and Ryder System in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Ryder System 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 Ryder System. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Ryder System has no effect on the direction of Bloom Energy i.e., Bloom Energy and Ryder System go up and down completely randomly.

Pair Corralation between Bloom Energy and Ryder System

Allowing for the 90-day total investment horizon Bloom Energy Corp is expected to generate 5.18 times more return on investment than Ryder System. However, Bloom Energy is 5.18 times more volatile than Ryder System. It trades about 0.18 of its potential returns per unit of risk. Ryder System is currently generating about 0.19 per unit of risk. If you would invest  1,038  in Bloom Energy Corp on September 12, 2024 and sell it today you would earn a total of  1,309  from holding Bloom Energy Corp or generate 126.11% return on investment over 90 days.

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

Bloom Energy Corp  vs.  Ryder System

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.

Ryder System

Risk-Adjusted Performance

14 of 100

Solid

Compared to the overall equity markets, risk-adjusted returns on investments in Ryder System are ranked lower than 14 (%) of all global equities and portfolios over the last 90 days. Even with relatively weak basic indicators, Ryder System reported solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with Bloom Energy and Ryder System

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

The idea behind Bloom Energy Corp and Ryder System 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 Idea Optimizer module to use advanced portfolio builder with pre-computed micro ideas to build optimal portfolio .