Correlation Between Enphase Energy and NETGEAR
Can any of the company-specific risk be diversified away by investing in both Enphase Energy and NETGEAR 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 NETGEAR into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Enphase Energy and NETGEAR, you can compare the effects of market volatilities on Enphase Energy and NETGEAR 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 NETGEAR. Check out your portfolio center. Please also check ongoing floating volatility patterns of Enphase Energy and NETGEAR.
Diversification Opportunities for Enphase Energy and NETGEAR
-0.79 | Correlation Coefficient |
Pay attention - limited upside
The 3 months correlation between Enphase and NETGEAR is -0.79. Overlapping area represents the amount of risk that can be diversified away by holding Enphase Energy and NETGEAR in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on NETGEAR 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 NETGEAR. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of NETGEAR has no effect on the direction of Enphase Energy i.e., Enphase Energy and NETGEAR go up and down completely randomly.
Pair Corralation between Enphase Energy and NETGEAR
Given the investment horizon of 90 days Enphase Energy is expected to under-perform the NETGEAR. In addition to that, Enphase Energy is 2.85 times more volatile than NETGEAR. It trades about -0.25 of its total potential returns per unit of risk. NETGEAR is currently generating about 0.29 per unit of volatility. If you would invest 2,097 in NETGEAR on August 23, 2024 and sell it today you would earn a total of 294.00 from holding NETGEAR or generate 14.02% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
Enphase Energy vs. NETGEAR
Performance |
| Timeline |
| Enphase Energy |
| NETGEAR |
Enphase Energy and NETGEAR Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Enphase Energy and NETGEAR
The main advantage of trading using opposite Enphase Energy and NETGEAR positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Enphase Energy position performs unexpectedly, NETGEAR 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 NETGEAR will offset losses from the drop in NETGEAR's long position.| Enphase Energy vs. Small Cap Core | Enphase Energy vs. Freedom Holding Corp | Enphase Energy vs. Gfl Environmental Holdings | Enphase Energy vs. Growth Fund Of |
| NETGEAR vs. KVH Industries | NETGEAR vs. Ituran Location and | NETGEAR vs. Aviat Networks | NETGEAR vs. Mynaric AG ADR |
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 Pair Correlation module to compare performance and examine fundamental relationship between any two equity instruments.
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