Correlation Between Bloom Energy and Transportation Portfolio

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

Diversification Opportunities for Bloom Energy and Transportation Portfolio

-0.29

Correlation Coefficient

Bloom Energy  Transportation Portfolio

Very good diversification

The 3 months correlation between Bloom and Transportation is -0.29. Overlapping area represents the amount of risk that can be diversified away by holding Bloom Energy Corp and Transportation Portfolio Trans in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Transportation Portfolio 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 Transportation Portfolio. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Transportation Portfolio has no effect on the direction of Bloom Energy i.e., Bloom Energy and Transportation Portfolio go up and down completely randomly.

Pair Corralation between Bloom Energy and Transportation Portfolio

Allowing for the 90-day total investment horizon Bloom Energy Corp is expected to generate 3.13 times more return on investment than Transportation Portfolio. However, Bloom Energy is 3.13 times more volatile than Transportation Portfolio Transportation. It trades about -0.05 of its potential returns per unit of risk. Transportation Portfolio Transportation is currently generating about -0.21 per unit of risk. If you would invest  1,173  in Bloom Energy Corp on February 1, 2024 and sell it today you would lose (60.00) from holding Bloom Energy Corp or give up 5.12% of portfolio value over 90 days.

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

Bloom Energy Corp  vs.  Transportation Portfolio Trans

Bloom Energy Corp

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Bloom Energy Corp has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of rather sound technical and fundamental indicators, Bloom Energy is not utilizing all of its potentials. The current stock price tumult, may contribute to shorter-term losses for the shareholders.

Transportation Portfolio

Risk-Adjusted Performance

5 of 100

Modest

Compared to the overall equity markets, risk-adjusted returns on investments in Transportation Portfolio Transportation are ranked lower than 5 (%) of all funds and portfolios of funds over the last 90 days. In spite of fairly strong technical and fundamental indicators, Transportation Portfolio is not utilizing all of its potentials. The current stock price disturbance, may contribute to short-term losses for the investors.

Pair Trading with Bloom Energy and Transportation Portfolio

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

The idea behind Bloom Energy Corp and Transportation Portfolio Transportation 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 Stocks Directory module to find actively traded stocks across global markets.