Correlation Between Atlantic Power and FuelCell Energy

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

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

Diversification Opportunities for Atlantic Power and FuelCell Energy

0.0

Correlation Coefficient

Atlantic Power  FuelCell Energy

Pay attention - limited upside

The 3 months correlation between Atlantic and FuelCell is 0.0. Overlapping area represents the amount of risk that can be diversified away by holding Atlantic Power and FuelCell Energy in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on FuelCell Energy and Atlantic Power 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 Atlantic Power 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 Atlantic Power i.e., Atlantic Power and FuelCell Energy go up and down completely randomly.

Pair Corralation between Atlantic Power and FuelCell Energy

If you would invest (100.00) in Atlantic Power on January 31, 2024 and sell it today you would earn a total of  100.00  from holding Atlantic Power or generate -100.0% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Flat
Strength	Insignificant
Accuracy	0.0%
Values	Daily Returns

Atlantic Power  vs.  FuelCell Energy

Atlantic Power

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Atlantic Power has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of comparatively stable basic indicators, Atlantic Power is not utilizing all of its potentials. The recent stock price uproar, may contribute to short-horizon losses for the private investors.

FuelCell Energy

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days FuelCell Energy has generated negative risk-adjusted returns adding no value to investors with long positions. Despite unsteady performance in the last few months, the Stock's technical and fundamental indicators remain quite persistent which may send shares a bit higher in May 2024. The latest mess may also be a sign of long-standing up-swing for the company institutional investors.

Pair Trading with Atlantic Power and FuelCell Energy

The main advantage of trading using opposite Atlantic Power and FuelCell Energy positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Atlantic Power 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 Atlantic Power 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 Volatility Analysis module to get historical volatility and risk analysis based on latest market data.