Correlation Between Energy Vault and ReNew Energy

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

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

Diversification Opportunities for Energy Vault and ReNew Energy

-0.57

Correlation Coefficient

Energy Vault  ReNew Energy

Excellent diversification

The 3 months correlation between Energy and ReNew is -0.57. Overlapping area represents the amount of risk that can be diversified away by holding Energy Vault Holdings and ReNew Energy Global in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on ReNew Energy Global and Energy Vault 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 Energy Vault Holdings are associated (or correlated) with ReNew Energy. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of ReNew Energy Global has no effect on the direction of Energy Vault i.e., Energy Vault and ReNew Energy go up and down completely randomly.

Pair Corralation between Energy Vault and ReNew Energy

Given the investment horizon of 90 days Energy Vault is expected to generate 2.78 times less return on investment than ReNew Energy. But when comparing it to its historical volatility, Energy Vault Holdings is 2.99 times less risky than ReNew Energy. It trades about 0.19 of its potential returns per unit of risk. ReNew Energy Global is currently generating about 0.18 of returns per unit of risk over similar time horizon. If you would invest  22.00  in ReNew Energy Global on September 17, 2024 and sell it today you would earn a total of  11.00  from holding ReNew Energy Global or generate 50.0% return on investment over 90 days.

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

Energy Vault Holdings  vs.  ReNew Energy Global

Energy Vault Holdings

Risk-Adjusted Performance

11 of 100

Good

Compared to the overall equity markets, risk-adjusted returns on investments in Energy Vault Holdings are ranked lower than 11 (%) of all global equities and portfolios over the last 90 days. In spite of fairly weak technical and fundamental indicators, Energy Vault showed solid returns over the last few months and may actually be approaching a breakup point.

ReNew Energy Global

Risk-Adjusted Performance

3 of 100

Insignificant

Compared to the overall equity markets, risk-adjusted returns on investments in ReNew Energy Global are ranked lower than 3 (%) of all global equities and portfolios over the last 90 days. In spite of fairly abnormal basic indicators, ReNew Energy showed solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with Energy Vault and ReNew Energy

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

The idea behind Energy Vault Holdings and ReNew Energy Global 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 Crypto Correlations module to use cryptocurrency correlation module to diversify your cryptocurrency portfolio across multiple coins.