Correlation Between FuelCell Energy and Capstone Companies

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

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

Diversification Opportunities for FuelCell Energy and Capstone Companies

0.43

Correlation Coefficient

FuelCell Energy  Capstone Companies

Very weak diversification

The 3 months correlation between FuelCell and Capstone is 0.43. Overlapping area represents the amount of risk that can be diversified away by holding FuelCell Energy and Capstone Companies in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Capstone Companies and FuelCell 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 FuelCell Energy are associated (or correlated) with Capstone Companies. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Capstone Companies has no effect on the direction of FuelCell Energy i.e., FuelCell Energy and Capstone Companies go up and down completely randomly.

Pair Corralation between FuelCell Energy and Capstone Companies

Given the investment horizon of 90 days FuelCell Energy is expected to generate 3.91 times less return on investment than Capstone Companies. But when comparing it to its historical volatility, FuelCell Energy is 3.25 times less risky than Capstone Companies. It trades about 0.14 of its potential returns per unit of risk. Capstone Companies is currently generating about 0.17 of returns per unit of risk over similar time horizon. If you would invest  2.93  in Capstone Companies on July 1, 2025 and sell it today you would earn a total of  4.47  from holding Capstone Companies or generate 152.56% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Together
Strength	Weak
Accuracy	98.44%
Values	Daily Returns

FuelCell Energy  vs.  Capstone Companies

FuelCell Energy

Risk-Adjusted Performance

Good

Compared to the overall equity markets, risk-adjusted returns on investments in FuelCell Energy are ranked lower than 11 (%) of all global equities and portfolios over the last 90 days. Despite quite fragile technical and fundamental indicators, FuelCell Energy disclosed solid returns over the last few months and may actually be approaching a breakup point.

Capstone Companies

Risk-Adjusted Performance

Good

Compared to the overall equity markets, risk-adjusted returns on investments in Capstone Companies are ranked lower than 13 (%) of all global equities and portfolios over the last 90 days. In spite of rather uncertain basic indicators, Capstone Companies exhibited solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with FuelCell Energy and Capstone Companies

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

The idea behind FuelCell Energy and Capstone Companies 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 Global Correlations module to find global opportunities by holding instruments from different markets.