Correlation Between Plug Power and Powell Industries

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

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

Diversification Opportunities for Plug Power and Powell Industries

0.01

Correlation Coefficient

Plug Power  Powell Industries

Significant diversification

The 3 months correlation between Plug and Powell is 0.01. Overlapping area represents the amount of risk that can be diversified away by holding Plug Power and Powell Industries in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Powell Industries 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 Powell Industries. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Powell Industries has no effect on the direction of Plug Power i.e., Plug Power and Powell Industries go up and down completely randomly.

Pair Corralation between Plug Power and Powell Industries

Given the investment horizon of 90 days Plug Power is expected to under-perform the Powell Industries. In addition to that, Plug Power is 1.38 times more volatile than Powell Industries. It trades about -0.16 of its total potential returns per unit of risk. Powell Industries is currently generating about 0.07 per unit of volatility. If you would invest  31,144  in Powell Industries on October 6, 2025 and sell it today you would earn a total of  4,108  from holding Powell Industries or generate 13.19% return on investment over 90 days.

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

Plug Power  vs.  Powell Industries

Plug Power

Risk-Adjusted Performance

Weakest

Over the last 90 days Plug Power has generated negative risk-adjusted returns adding no value to investors with long positions. Despite fragile performance in the last few months, the Stock's basic indicators remain nearly stable which may send shares a bit higher in February 2026. The current disturbance may also be a sign of long-run up-swing for the company stockholders.

Powell Industries

Risk-Adjusted Performance

Mild

Compared to the overall equity markets, risk-adjusted returns on investments in Powell Industries are ranked lower than 5 (%) of all global equities and portfolios over the last 90 days. Despite quite uncertain basic indicators, Powell Industries disclosed solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with Plug Power and Powell Industries

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

The idea behind Plug Power and Powell Industries 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 Insider Screener module to find insiders across different sectors to evaluate their impact on performance.