Correlation Between Advanced Energy and Brenmiller Energy

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Can any of the company-specific risk be diversified away by investing in both Advanced Energy and Brenmiller 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 Advanced Energy and Brenmiller Energy into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Advanced Energy and Brenmiller Energy, you can compare the effects of market volatilities on Advanced Energy and Brenmiller 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 Advanced Energy with a short position of Brenmiller Energy. Check out your portfolio center. Please also check ongoing floating volatility patterns of Advanced Energy and Brenmiller Energy.

Diversification Opportunities for Advanced Energy and Brenmiller Energy

0.77
  Correlation Coefficient

Poor diversification

The 3 months correlation between Advanced and Brenmiller is 0.77. Overlapping area represents the amount of risk that can be diversified away by holding Advanced Energy and Brenmiller Energy in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Brenmiller Energy and Advanced 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 Advanced Energy are associated (or correlated) with Brenmiller Energy. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Brenmiller Energy has no effect on the direction of Advanced Energy i.e., Advanced Energy and Brenmiller Energy go up and down completely randomly.

Pair Corralation between Advanced Energy and Brenmiller Energy

Given the investment horizon of 90 days Advanced Energy is expected to generate 652.2 times less return on investment than Brenmiller Energy. But when comparing it to its historical volatility, Advanced Energy is 37.96 times less risky than Brenmiller Energy. It trades about 0.01 of its potential returns per unit of risk. Brenmiller Energy is currently generating about 0.1 of returns per unit of risk over similar time horizon. If you would invest  0.00  in Brenmiller Energy on July 2, 2022 and sell it today you would earn a total of  374.00  from holding Brenmiller Energy or generate 9.223372036854776E16% return on investment over 90 days.
Time Period3 Months [change]
DirectionMoves Together 
StrengthSignificant
Accuracy18.87%
ValuesDaily Returns

Advanced Energy  vs.  Brenmiller Energy

 Performance (%) 
       Timeline  
Advanced Energy 
Advanced Performance
5 of 100
Compared to the overall equity markets, risk-adjusted returns on investments in Advanced Energy are ranked lower than 5 (%) of all global equities and portfolios over the last 90 days. Even with relatively conflicting forward indicators, Advanced Energy may actually be approaching a critical reversion point that can send shares even higher in October 2022.

Advanced Price Channel

Brenmiller Energy 
Brenmiller Performance
10 of 100
Compared to the overall equity markets, risk-adjusted returns on investments in Brenmiller Energy are ranked lower than 10 (%) of all global equities and portfolios over the last 90 days. In spite of rather sluggish basic indicators, Brenmiller Energy exhibited solid returns over the last few months and may actually be approaching a breakup point.

Brenmiller Price Channel

Advanced Energy and Brenmiller Energy Volatility Contrast

   Predicted Return Density   
       Returns  

Pair Trading with Advanced Energy and Brenmiller Energy

The main advantage of trading using opposite Advanced Energy and Brenmiller Energy positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Advanced Energy position performs unexpectedly, Brenmiller 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 Brenmiller Energy will offset losses from the drop in Brenmiller Energy's long position.
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The idea behind Advanced Energy and Brenmiller Energy 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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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 Price Exposure Probability module to analyze equity upside and downside potential for a given time horizon across multiple markets.

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