Correlation Between Bloom Energy and Solid Power

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

Diversification Opportunities for Bloom Energy and Solid Power

0.89

Correlation Coefficient

Bloom Energy  Solid Power

Very poor diversification

The 3 months correlation between Bloom and Solid is 0.89. Overlapping area represents the amount of risk that can be diversified away by holding Bloom Energy Corp and Solid Power in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Solid Power 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 Solid Power. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Solid Power has no effect on the direction of Bloom Energy i.e., Bloom Energy and Solid Power go up and down completely randomly.

Pair Corralation between Bloom Energy and Solid Power

Allowing for the 90-day total investment horizon Bloom Energy is expected to generate 1.54 times less return on investment than Solid Power. But when comparing it to its historical volatility, Bloom Energy Corp is 1.38 times less risky than Solid Power. It trades about 0.25 of its potential returns per unit of risk. Solid Power is currently generating about 0.28 of returns per unit of risk over similar time horizon. If you would invest  110.00  in Solid Power on May 1, 2025 and sell it today you would earn a total of  213.00  from holding Solid Power or generate 193.64% return on investment over 90 days.

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

Bloom Energy Corp  vs.  Solid Power

Bloom Energy Corp

Risk-Adjusted Performance

Solid

Compared to the overall equity markets, risk-adjusted returns on investments in Bloom Energy Corp are ranked lower than 19 (%) of all global equities and portfolios over the last 90 days. In spite of rather conflicting technical and fundamental indicators, Bloom Energy exhibited solid returns over the last few months and may actually be approaching a breakup point.

Solid Power

Risk-Adjusted Performance

Solid

Compared to the overall equity markets, risk-adjusted returns on investments in Solid Power are ranked lower than 21 (%) of all global equities and portfolios over the last 90 days. Even with relatively uncertain fundamental indicators, Solid Power reported solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with Bloom Energy and Solid Power

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

The idea behind Bloom Energy Corp and Solid Power 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 Portfolio Backtesting module to avoid under-diversification and over-optimization by backtesting your portfolios.