Correlation Between Fusion Fuel and Constellation Energy

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

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

Diversification Opportunities for Fusion Fuel and Constellation Energy

0.87

Correlation Coefficient

Fusion Fuel  Constellation Energy

Very poor diversification

The 3 months correlation between Fusion and Constellation is 0.87. Overlapping area represents the amount of risk that can be diversified away by holding Fusion Fuel Green and Constellation Energy Corp in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Constellation Energy Corp and Fusion Fuel 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 Fusion Fuel Green are associated (or correlated) with Constellation Energy. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Constellation Energy Corp has no effect on the direction of Fusion Fuel i.e., Fusion Fuel and Constellation Energy go up and down completely randomly.

Pair Corralation between Fusion Fuel and Constellation Energy

Given the investment horizon of 90 days Fusion Fuel Green is expected to under-perform the Constellation Energy. In addition to that, Fusion Fuel is 1.13 times more volatile than Constellation Energy Corp. It trades about -0.13 of its total potential returns per unit of risk. Constellation Energy Corp is currently generating about -0.05 per unit of volatility. If you would invest  30,574  in Constellation Energy Corp on February 3, 2025 and sell it today you would lose (5,848) from holding Constellation Energy Corp or give up 19.13% of portfolio value over 90 days.

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

Fusion Fuel Green  vs.  Constellation Energy Corp

Fusion Fuel Green

Risk-Adjusted Performance

Very Weak

Over the last 90 days Fusion Fuel Green has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of weak performance in the last few months, the Stock's basic indicators remain very healthy which may send shares a bit higher in June 2025. The recent disarray may also be a sign of long period up-swing for the firm investors.

Constellation Energy Corp

Risk-Adjusted Performance

Very Weak

Over the last 90 days Constellation Energy Corp has generated negative risk-adjusted returns adding no value to investors with long positions. Despite weak performance in the last few months, the Stock's technical and fundamental indicators remain nearly stable which may send shares a bit higher in June 2025. The current disturbance may also be a sign of long-run up-swing for the company stockholders.

Pair Trading with Fusion Fuel and Constellation Energy

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

The idea behind Fusion Fuel Green and Constellation Energy 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.

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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 My Watchlist Analysis module to analyze my current watchlist and to refresh optimization strategy. Macroaxis watchlist is based on self-learning algorithm to remember stocks you like.