Correlation Between Advanced Energy and Tritium DCFC
Can any of the company-specific risk be diversified away by investing in both Advanced Energy and Tritium DCFC 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 Tritium DCFC into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Advanced Energy Industries and Tritium DCFC Limited, you can compare the effects of market volatilities on Advanced Energy and Tritium DCFC 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 Tritium DCFC. Check out your portfolio center. Please also check ongoing floating volatility patterns of Advanced Energy and Tritium DCFC.
Diversification Opportunities for Advanced Energy and Tritium DCFC
-0.72 | Correlation Coefficient |
Pay attention - limited upside
The 3 months correlation between Advanced and Tritium is -0.72. Overlapping area represents the amount of risk that can be diversified away by holding Advanced Energy Industries and Tritium DCFC Limited in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Tritium DCFC Limited 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 Industries are associated (or correlated) with Tritium DCFC. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Tritium DCFC Limited has no effect on the direction of Advanced Energy i.e., Advanced Energy and Tritium DCFC go up and down completely randomly.
Pair Corralation between Advanced Energy and Tritium DCFC
Given the investment horizon of 90 days Advanced Energy is expected to generate 8.46 times less return on investment than Tritium DCFC. But when comparing it to its historical volatility, Advanced Energy Industries is 8.98 times less risky than Tritium DCFC. It trades about 0.03 of its potential returns per unit of risk. Tritium DCFC Limited is currently generating about 0.03 of returns per unit of risk over similar time horizon. If you would invest 35.00 in Tritium DCFC Limited on August 24, 2024 and sell it today you would lose (33.20) from holding Tritium DCFC Limited or give up 94.86% of portfolio value over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Weak |
| Accuracy | 69.15% |
| Values | Daily Returns |
Advanced Energy Industries vs. Tritium DCFC Limited
Performance |
| Timeline |
| Advanced Energy Indu |
| Tritium DCFC Limited |
Risk-Adjusted Performance
0 of 100
Weak | Strong |
Very Weak
Advanced Energy and Tritium DCFC Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Advanced Energy and Tritium DCFC
The main advantage of trading using opposite Advanced Energy and Tritium DCFC positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Advanced Energy position performs unexpectedly, Tritium DCFC 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 Tritium DCFC will offset losses from the drop in Tritium DCFC's long position.| Advanced Energy vs. MKS Instruments | Advanced Energy vs. Axcelis Technologies | Advanced Energy vs. Entegris | Advanced Energy vs. Cohu Inc |
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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 the Portfolio Dashboard module to portfolio dashboard that provides centralized access to all your investments.
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