Correlation Between Enphase Energy and Teradyne
Can any of the company-specific risk be diversified away by investing in both Enphase Energy and Teradyne 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 Teradyne into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Enphase Energy and Teradyne, you can compare the effects of market volatilities on Enphase Energy and Teradyne 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 Teradyne. Check out your portfolio center. Please also check ongoing floating volatility patterns of Enphase Energy and Teradyne.
Diversification Opportunities for Enphase Energy and Teradyne
0.89 | Correlation Coefficient |
Very poor diversification
The 3 months correlation between Enphase and Teradyne is 0.89. Overlapping area represents the amount of risk that can be diversified away by holding Enphase Energy and Teradyne in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Teradyne 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 Teradyne. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Teradyne has no effect on the direction of Enphase Energy i.e., Enphase Energy and Teradyne go up and down completely randomly.
Pair Corralation between Enphase Energy and Teradyne
Given the investment horizon of 90 days Enphase Energy is expected to under-perform the Teradyne. In addition to that, Enphase Energy is 1.99 times more volatile than Teradyne. It trades about -0.25 of its total potential returns per unit of risk. Teradyne is currently generating about -0.24 per unit of volatility. If you would invest 12,536 in Teradyne on August 23, 2024 and sell it today you would lose (1,984) from holding Teradyne or give up 15.83% of portfolio value over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Strong |
| Accuracy | 100.0% |
| Values | Daily Returns |
Enphase Energy vs. Teradyne
Performance |
| Timeline |
| Enphase Energy |
| Teradyne |
Enphase Energy and Teradyne Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Enphase Energy and Teradyne
The main advantage of trading using opposite Enphase Energy and Teradyne positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Enphase Energy position performs unexpectedly, Teradyne 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 Teradyne will offset losses from the drop in Teradyne'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 |
| Teradyne vs. IPG Photonics | Teradyne vs. Ultra Clean Holdings | Teradyne vs. Onto Innovation | Teradyne vs. Cohu Inc |
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 Comparator module to compare the composition, asset allocations and performance of any two portfolios in your account.
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