Correlation Between Expion360 and FuelCell Energy

Can any of the company-specific risk be diversified away by investing in both Expion360 and FuelCell 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 Expion360 and FuelCell Energy into the same portfolio, which is an essential part of the fundamental portfolio management process.

By analyzing existing cross correlation between Expion360 and FuelCell Energy, you can compare the effects of market volatilities on Expion360 and FuelCell 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 Expion360 with a short position of FuelCell Energy. Check out your portfolio center. Please also check ongoing floating volatility patterns of Expion360 and FuelCell Energy.

Diversification Opportunities for Expion360 and FuelCell Energy

0.27

Correlation Coefficient

Expion360  FuelCell Energy

Modest diversification

The 3 months correlation between Expion360 and FuelCell is 0.27. Overlapping area represents the amount of risk that can be diversified away by holding Expion360 and FuelCell Energy in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on FuelCell Energy and Expion360 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 Expion360 are associated (or correlated) with FuelCell Energy. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of FuelCell Energy has no effect on the direction of Expion360 i.e., Expion360 and FuelCell Energy go up and down completely randomly.

Pair Corralation between Expion360 and FuelCell Energy

Given the investment horizon of 90 days Expion360 is expected to under-perform the FuelCell Energy. In addition to that, Expion360 is 1.38 times more volatile than FuelCell Energy. It trades about -0.09 of its total potential returns per unit of risk. FuelCell Energy is currently generating about 0.02 per unit of volatility. If you would invest  1,170  in FuelCell Energy on September 26, 2024 and sell it today you would lose (132.00) from holding FuelCell Energy or give up 11.28% of portfolio value over 90 days.

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

Expion360  vs.  FuelCell Energy

Expion360

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Expion360 has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of unsteady performance in the last few months, the Stock's basic indicators remain very healthy which may send shares a bit higher in January 2025. The recent disarray may also be a sign of long period up-swing for the firm investors.

FuelCell Energy

Risk-Adjusted Performance

1 of 100

Weak

Compared to the overall equity markets, risk-adjusted returns on investments in FuelCell Energy are ranked lower than 1 (%) of all global equities and portfolios over the last 90 days. Despite quite inconsistent technical and fundamental indicators, FuelCell Energy may actually be approaching a critical reversion point that can send shares even higher in January 2025.

Pair Trading with Expion360 and FuelCell Energy

The main advantage of trading using opposite Expion360 and FuelCell Energy positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Expion360 position performs unexpectedly, FuelCell 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 FuelCell Energy will offset losses from the drop in FuelCell Energy's long position.

The idea behind Expion360 and FuelCell 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.

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 ETF Categories module to list of ETF categories grouped based on various criteria, such as the investment strategy or type of investments.