Correlation Between FuelCell Energy and Quantumscape Corp

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

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

Diversification Opportunities for FuelCell Energy and Quantumscape Corp

0.19

Correlation Coefficient

FuelCell Energy  Quantumscape Corp

Average diversification

The 3 months correlation between FuelCell and Quantumscape is 0.19. Overlapping area represents the amount of risk that can be diversified away by holding FuelCell Energy and Quantumscape Corp in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Quantumscape Corp 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 Quantumscape Corp. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Quantumscape Corp has no effect on the direction of FuelCell Energy i.e., FuelCell Energy and Quantumscape Corp go up and down completely randomly.

Pair Corralation between FuelCell Energy and Quantumscape Corp

Given the investment horizon of 90 days FuelCell Energy is expected to generate 3.2 times less return on investment than Quantumscape Corp. But when comparing it to its historical volatility, FuelCell Energy is 1.17 times less risky than Quantumscape Corp. It trades about 0.07 of its potential returns per unit of risk. Quantumscape Corp is currently generating about 0.19 of returns per unit of risk over similar time horizon. If you would invest  399.00  in Quantumscape Corp on May 2, 2025 and sell it today you would earn a total of  479.00  from holding Quantumscape Corp or generate 120.05% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Together
Strength	Insignificant
Accuracy	98.39%
Values	Daily Returns

FuelCell Energy  vs.  Quantumscape Corp

FuelCell Energy

Risk-Adjusted Performance

Modest

Compared to the overall equity markets, risk-adjusted returns on investments in FuelCell Energy are ranked lower than 5 (%) 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.

Quantumscape Corp

Risk-Adjusted Performance

Good

Compared to the overall equity markets, risk-adjusted returns on investments in Quantumscape Corp are ranked lower than 14 (%) of all global equities and portfolios over the last 90 days. In spite of comparatively weak basic indicators, Quantumscape Corp unveiled solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with FuelCell Energy and Quantumscape Corp

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

The idea behind FuelCell Energy and Quantumscape Corp 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.