Correlation Between SolarWindow Technologies and Fluence Energy

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

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

Diversification Opportunities for SolarWindow Technologies and Fluence Energy

0.56

Correlation Coefficient

SolarWindow Technologies  Fluence Energy

Very weak diversification

The 3 months correlation between SolarWindow and Fluence is 0.56. Overlapping area represents the amount of risk that can be diversified away by holding SolarWindow Technologies and Fluence Energy in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Fluence Energy and SolarWindow Technologies 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 SolarWindow Technologies are associated (or correlated) with Fluence Energy. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Fluence Energy has no effect on the direction of SolarWindow Technologies i.e., SolarWindow Technologies and Fluence Energy go up and down completely randomly.

Pair Corralation between SolarWindow Technologies and Fluence Energy

Given the investment horizon of 90 days SolarWindow Technologies is expected to generate 3.39 times more return on investment than Fluence Energy. However, SolarWindow Technologies is 3.39 times more volatile than Fluence Energy. It trades about 0.1 of its potential returns per unit of risk. Fluence Energy is currently generating about 0.05 per unit of risk. If you would invest  24.00  in SolarWindow Technologies on September 3, 2024 and sell it today you would earn a total of  8.00  from holding SolarWindow Technologies or generate 33.33% return on investment over 90 days.

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

SolarWindow Technologies  vs.  Fluence Energy

SolarWindow Technologies

Risk-Adjusted Performance

7 of 100

OK

Compared to the overall equity markets, risk-adjusted returns on investments in SolarWindow Technologies are ranked lower than 7 (%) of all global equities and portfolios over the last 90 days. In spite of fairly fragile fundamental indicators, SolarWindow Technologies showed solid returns over the last few months and may actually be approaching a breakup point.

Fluence Energy

Risk-Adjusted Performance

4 of 100

Insignificant

Compared to the overall equity markets, risk-adjusted returns on investments in Fluence Energy are ranked lower than 4 (%) of all global equities and portfolios over the last 90 days. In spite of rather uncertain basic indicators, Fluence Energy exhibited solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with SolarWindow Technologies and Fluence Energy

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

The idea behind SolarWindow Technologies and Fluence Energy 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 Breakdown module to analyze constituents of all Macroaxis ideas. Macroaxis investment ideas are predefined, sector-focused investing themes.