Correlation Between Enphase Energy and CVD Equipment
Can any of the company-specific risk be diversified away by investing in both Enphase Energy and CVD Equipment 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 CVD Equipment into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Enphase Energy and CVD Equipment, you can compare the effects of market volatilities on Enphase Energy and CVD Equipment 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 CVD Equipment. Check out your portfolio center. Please also check ongoing floating volatility patterns of Enphase Energy and CVD Equipment.
Diversification Opportunities for Enphase Energy and CVD Equipment
0.04 | Correlation Coefficient |
Significant diversification
The 3 months correlation between Enphase and CVD is 0.04. Overlapping area represents the amount of risk that can be diversified away by holding Enphase Energy and CVD Equipment in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on CVD Equipment 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 CVD Equipment. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of CVD Equipment has no effect on the direction of Enphase Energy i.e., Enphase Energy and CVD Equipment go up and down completely randomly.
Pair Corralation between Enphase Energy and CVD Equipment
Given the investment horizon of 90 days Enphase Energy is expected to under-perform the CVD Equipment. But the stock apears to be less risky and, when comparing its historical volatility, Enphase Energy is 1.0 times less risky than CVD Equipment. The stock trades about -0.13 of its potential returns per unit of risk. The CVD Equipment is currently generating about 0.08 of returns per unit of risk over similar time horizon. If you would invest 326.00 in CVD Equipment on September 26, 2024 and sell it today you would earn a total of 56.00 from holding CVD Equipment or generate 17.18% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Insignificant |
| Accuracy | 100.0% |
| Values | Daily Returns |
Enphase Energy vs. CVD Equipment
Performance |
| Timeline |
| Enphase Energy |
| CVD Equipment |
Enphase Energy and CVD Equipment Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Enphase Energy and CVD Equipment
The main advantage of trading using opposite Enphase Energy and CVD Equipment positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Enphase Energy position performs unexpectedly, CVD Equipment 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 CVD Equipment will offset losses from the drop in CVD Equipment's long position.| Enphase Energy vs. First Solar | Enphase Energy vs. Sunrun Inc | Enphase Energy vs. Canadian Solar | Enphase Energy vs. SolarEdge Technologies |
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 Equity Analysis module to research over 250,000 global equities including funds, stocks and ETFs to find investment opportunities.
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