Correlation Between Altus Power and Fluence Energy

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

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

Diversification Opportunities for Altus Power and Fluence Energy

-0.41

Correlation Coefficient

Altus Power  Fluence Energy

Very good diversification

The 3 months correlation between Altus and Fluence is -0.41. Overlapping area represents the amount of risk that can be diversified away by holding Altus Power and Fluence Energy in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Fluence Energy and Altus 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 Altus Power 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 Altus Power i.e., Altus Power and Fluence Energy go up and down completely randomly.

Pair Corralation between Altus Power and Fluence Energy

Given the investment horizon of 90 days Altus Power is expected to under-perform the Fluence Energy. But the etf apears to be less risky and, when comparing its historical volatility, Altus Power is 1.04 times less risky than Fluence Energy. The etf trades about 0.0 of its potential returns per unit of risk. The Fluence Energy is currently generating about 0.02 of returns per unit of risk over similar time horizon. If you would invest  1,626  in Fluence Energy on September 25, 2024 and sell it today you would lose (105.00) from holding Fluence Energy or give up 6.46% of portfolio value over 90 days.

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

Altus Power  vs.  Fluence Energy

Altus Power

Risk-Adjusted Performance

7 of 100

Modest

Compared to the overall equity markets, risk-adjusted returns on investments in Altus Power are ranked lower than 7 (%) of all global equities and portfolios over the last 90 days. In spite of comparatively weak basic indicators, Altus Power unveiled solid returns over the last few months and may actually be approaching a breakup point.

Fluence Energy

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Fluence Energy has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of abnormal performance in the last few months, the Stock's basic indicators remain rather sound which may send shares a bit higher in January 2025. The latest tumult may also be a sign of longer-term up-swing for the firm shareholders.

Pair Trading with Altus Power and Fluence Energy

The main advantage of trading using opposite Altus Power and Fluence Energy positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Altus Power 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 Altus Power 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.

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 Idea Optimizer module to use advanced portfolio builder with pre-computed micro ideas to build optimal portfolio .