Correlation Between Plug Power and Continental

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

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

Diversification Opportunities for Plug Power and Continental

-0.34

Correlation Coefficient

Plug Power  Continental

Very good diversification

The 3 months correlation between Plug and Continental is -0.34. Overlapping area represents the amount of risk that can be diversified away by holding Plug Power and Caleres in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Continental and Plug 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 Plug Power are associated (or correlated) with Continental. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Continental has no effect on the direction of Plug Power i.e., Plug Power and Continental go up and down completely randomly.

Pair Corralation between Plug Power and Continental

Given the investment horizon of 90 days Plug Power is expected to generate 1.79 times more return on investment than Continental. However, Plug Power is 1.79 times more volatile than Caleres. It trades about 0.15 of its potential returns per unit of risk. Caleres is currently generating about -0.02 per unit of risk. If you would invest  79.00  in Plug Power on May 3, 2025 and sell it today you would earn a total of  61.00  from holding Plug Power or generate 77.22% return on investment over 90 days.

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

Plug Power  vs.  Caleres

Plug Power

Risk-Adjusted Performance

Good

Compared to the overall equity markets, risk-adjusted returns on investments in Plug Power are ranked lower than 11 (%) of all global equities and portfolios over the last 90 days. Despite nearly conflicting basic indicators, Plug Power reported solid returns over the last few months and may actually be approaching a breakup point.

Continental

Risk-Adjusted Performance

Very Weak

Over the last 90 days Caleres has generated negative risk-adjusted returns adding no value to investors with long positions. Despite latest weak performance, the Stock's basic indicators remain persistent and the latest mess on Wall Street may also be a sign of long-standing gains for the company institutional investors.

Pair Trading with Plug Power and Continental

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

The idea behind Plug Power and Caleres 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 Global Correlations module to find global opportunities by holding instruments from different markets.