Correlation Between Fluence Energy and Centrais Electricas

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

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

Diversification Opportunities for Fluence Energy and Centrais Electricas

0.7

Correlation Coefficient

Fluence Energy  Centrais Electricas

Poor diversification

The 3 months correlation between Fluence and Centrais is 0.7. Overlapping area represents the amount of risk that can be diversified away by holding Fluence Energy and Centrais Electricas Brasileira in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Centrais Electricas and Fluence 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 Fluence Energy are associated (or correlated) with Centrais Electricas. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Centrais Electricas has no effect on the direction of Fluence Energy i.e., Fluence Energy and Centrais Electricas go up and down completely randomly.

Pair Corralation between Fluence Energy and Centrais Electricas

Given the investment horizon of 90 days Fluence Energy is expected to generate 2.37 times more return on investment than Centrais Electricas. However, Fluence Energy is 2.37 times more volatile than Centrais Electricas Brasileiras. It trades about -0.01 of its potential returns per unit of risk. Centrais Electricas Brasileiras is currently generating about -0.13 per unit of risk. If you would invest  1,778  in Fluence Energy on September 21, 2024 and sell it today you would lose (257.00) from holding Fluence Energy or give up 14.45% of portfolio value over 90 days.

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

Fluence Energy  vs.  Centrais Electricas Brasileira

Fluence Energy

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Fluence Energy has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of uncertain performance in the last few months, the Stock's basic indicators remain rather sound which may send shares a bit higher in January 2025. The latest tumult may also be a sign of longer-term up-swing for the firm shareholders.

Centrais Electricas

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Centrais Electricas Brasileiras has generated negative risk-adjusted returns adding no value to investors with long positions. Even with unsteady performance in the last few months, the Stock's fundamental drivers remain relatively invariable which may send shares a bit higher in January 2025. The latest agitation may also be a sign of long-running up-swing for the enterprise retail investors.

Pair Trading with Fluence Energy and Centrais Electricas

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

The idea behind Fluence Energy and Centrais Electricas Brasileiras 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 Premium Stories module to follow Macroaxis premium stories from verified contributors across different equity types, categories and coverage scope.