Correlation Between Enphase Energy and Onto Innovation
Can any of the company-specific risk be diversified away by investing in both Enphase Energy and Onto Innovation 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 Onto Innovation into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Enphase Energy and Onto Innovation, you can compare the effects of market volatilities on Enphase Energy and Onto Innovation 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 Onto Innovation. Check out your portfolio center. Please also check ongoing floating volatility patterns of Enphase Energy and Onto Innovation.
Diversification Opportunities for Enphase Energy and Onto Innovation
0.65 | Correlation Coefficient |
Poor diversification
The 3 months correlation between Enphase and Onto is 0.65. Overlapping area represents the amount of risk that can be diversified away by holding Enphase Energy and Onto Innovation in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Onto Innovation 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 Onto Innovation. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Onto Innovation has no effect on the direction of Enphase Energy i.e., Enphase Energy and Onto Innovation go up and down completely randomly.
Pair Corralation between Enphase Energy and Onto Innovation
Given the investment horizon of 90 days Enphase Energy is expected to under-perform the Onto Innovation. In addition to that, Enphase Energy is 1.12 times more volatile than Onto Innovation. It trades about -0.22 of its total potential returns per unit of risk. Onto Innovation is currently generating about -0.07 per unit of volatility. If you would invest 20,842 in Onto Innovation on August 24, 2024 and sell it today you would lose (4,192) from holding Onto Innovation or give up 20.11% of portfolio value over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Significant |
| Accuracy | 100.0% |
| Values | Daily Returns |
Enphase Energy vs. Onto Innovation
Performance |
| Timeline |
| Enphase Energy |
| Onto Innovation |
Enphase Energy and Onto Innovation Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Enphase Energy and Onto Innovation
The main advantage of trading using opposite Enphase Energy and Onto Innovation positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Enphase Energy position performs unexpectedly, Onto Innovation 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 Onto Innovation will offset losses from the drop in Onto Innovation's long position.| Enphase Energy vs. First Solar | Enphase Energy vs. Sunrun Inc | Enphase Energy vs. Canadian Solar | Enphase Energy vs. SolarEdge Technologies |
| Onto Innovation vs. Camtek | Onto Innovation vs. Amtech Systems | Onto Innovation vs. Veeco Instruments | Onto Innovation vs. Ichor Holdings |
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 Risk-Return Analysis module to view associations between returns expected from investment and the risk you assume.
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