Correlation Between Solid Power and ESS Tech
Can any of the company-specific risk be diversified away by investing in both Solid Power and ESS Tech 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 Solid Power and ESS Tech into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Solid Power and ESS Tech, you can compare the effects of market volatilities on Solid Power and ESS Tech 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 Solid Power with a short position of ESS Tech. Check out your portfolio center. Please also check ongoing floating volatility patterns of Solid Power and ESS Tech.
Diversification Opportunities for Solid Power and ESS Tech
-0.76 | Correlation Coefficient |
Pay attention - limited upside
The 3 months correlation between Solid and ESS is -0.76. Overlapping area represents the amount of risk that can be diversified away by holding Solid Power and ESS Tech in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on ESS Tech and Solid 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 Solid Power are associated (or correlated) with ESS Tech. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of ESS Tech has no effect on the direction of Solid Power i.e., Solid Power and ESS Tech go up and down completely randomly.
Pair Corralation between Solid Power and ESS Tech
Given the investment horizon of 90 days Solid Power is expected to generate 0.32 times more return on investment than ESS Tech. However, Solid Power is 3.15 times less risky than ESS Tech. It trades about 0.19 of its potential returns per unit of risk. ESS Tech is currently generating about -0.05 per unit of risk. If you would invest 115.00 in Solid Power on March 23, 2025 and sell it today you would earn a total of 83.00 from holding Solid Power or generate 72.17% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
Solid Power vs. ESS Tech
Performance |
| Timeline |
| Solid Power |
| ESS Tech |
Solid Power and ESS Tech Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Solid Power and ESS Tech
The main advantage of trading using opposite Solid Power and ESS Tech positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Solid Power position performs unexpectedly, ESS Tech 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 ESS Tech will offset losses from the drop in ESS Tech's long position.| Solid Power vs. Plug Power | Solid Power vs. FuelCell Energy | Solid Power vs. Enovix Corp | Solid Power vs. Microvast Holdings |
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 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.
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