Correlation Between Array Technologies and Nextracker
Can any of the company-specific risk be diversified away by investing in both Array Technologies and Nextracker 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 Array Technologies and Nextracker into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Array Technologies and Nextracker Class A, you can compare the effects of market volatilities on Array Technologies and Nextracker 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 Array Technologies with a short position of Nextracker. Check out your portfolio center. Please also check ongoing floating volatility patterns of Array Technologies and Nextracker.
Diversification Opportunities for Array Technologies and Nextracker
0.33 | Correlation Coefficient |
Weak diversification
The 3 months correlation between Array and Nextracker is 0.33. Overlapping area represents the amount of risk that can be diversified away by holding Array Technologies and Nextracker Class A in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Nextracker Class A and Array Technologies 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 Array Technologies are associated (or correlated) with Nextracker. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Nextracker Class A has no effect on the direction of Array Technologies i.e., Array Technologies and Nextracker go up and down completely randomly.
Pair Corralation between Array Technologies and Nextracker
Given the investment horizon of 90 days Array Technologies is expected to generate 1.51 times less return on investment than Nextracker. In addition to that, Array Technologies is 1.21 times more volatile than Nextracker Class A. It trades about 0.08 of its total potential returns per unit of risk. Nextracker Class A is currently generating about 0.15 per unit of volatility. If you would invest 3,197 in Nextracker Class A on August 31, 2024 and sell it today you would earn a total of 619.00 from holding Nextracker Class A or generate 19.36% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Very Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
Array Technologies vs. Nextracker Class A
Performance |
| Timeline |
| Array Technologies |
| Nextracker Class A |
Array Technologies and Nextracker Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Array Technologies and Nextracker
The main advantage of trading using opposite Array Technologies and Nextracker positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Array Technologies position performs unexpectedly, Nextracker 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 Nextracker will offset losses from the drop in Nextracker's long position.| Array Technologies vs. SolarEdge Technologies | Array Technologies vs. Enphase Energy | Array Technologies vs. Canadian Solar | Array Technologies vs. Sunrun Inc |
| Nextracker vs. Braskem SA Class | Nextracker vs. Luxfer Holdings PLC | Nextracker vs. Sealed Air | Nextracker vs. Axalta Coating Systems |
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 Diagnostics module to use generated alerts and portfolio events aggregator to diagnose current holdings.
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