Correlation Between Enphase Energy and KLA
Can any of the company-specific risk be diversified away by investing in both Enphase Energy and KLA 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 Enphase Energy and KLA into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Enphase Energy and KLA Corporation, you can compare the effects of market volatilities on Enphase Energy and KLA 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 Enphase Energy with a short position of KLA. Check out your portfolio center. Please also check ongoing floating volatility patterns of Enphase Energy and KLA.
Diversification Opportunities for Enphase Energy and KLA
0.8 | Correlation Coefficient |
Very poor diversification
The 3 months correlation between Enphase and KLA is 0.8. Overlapping area represents the amount of risk that can be diversified away by holding Enphase Energy and KLA Corp. in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on KLA Corporation and Enphase 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 Enphase Energy are associated (or correlated) with KLA. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of KLA Corporation has no effect on the direction of Enphase Energy i.e., Enphase Energy and KLA go up and down completely randomly.
Pair Corralation between Enphase Energy and KLA
Assuming the 90 days horizon Enphase Energy is expected to under-perform the KLA. In addition to that, Enphase Energy is 1.64 times more volatile than KLA Corporation. It trades about -0.05 of its total potential returns per unit of risk. KLA Corporation is currently generating about 0.06 per unit of volatility. If you would invest 35,798 in KLA Corporation on August 28, 2024 and sell it today you would earn a total of 25,902 from holding KLA Corporation or generate 72.36% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Strong |
| Accuracy | 100.0% |
| Values | Daily Returns |
Enphase Energy vs. KLA Corp.
Performance |
| Timeline |
| Enphase Energy |
| KLA Corporation |
Enphase Energy and KLA Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Enphase Energy and KLA
The main advantage of trading using opposite Enphase Energy and KLA positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Enphase Energy position performs unexpectedly, KLA 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 KLA will offset losses from the drop in KLA's long position.| Enphase Energy vs. SINGAPORE AIRLINES | Enphase Energy vs. Southwest Airlines Co | Enphase Energy vs. International Consolidated Airlines | Enphase Energy vs. United Airlines Holdings |
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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 Watchlist Optimization module to optimize watchlists to build efficient portfolios or rebalance existing positions based on the mean-variance optimization algorithm.
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