Correlation Between Enphase Energy and Ubiquiti Networks
Can any of the company-specific risk be diversified away by investing in both Enphase Energy and Ubiquiti Networks 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 Ubiquiti Networks into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Enphase Energy and Ubiquiti Networks, you can compare the effects of market volatilities on Enphase Energy and Ubiquiti Networks 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 Ubiquiti Networks. Check out your portfolio center. Please also check ongoing floating volatility patterns of Enphase Energy and Ubiquiti Networks.
Diversification Opportunities for Enphase Energy and Ubiquiti Networks
-0.93 | Correlation Coefficient |
Pay attention - limited upside
The 3 months correlation between Enphase and Ubiquiti is -0.93. Overlapping area represents the amount of risk that can be diversified away by holding Enphase Energy and Ubiquiti Networks in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Ubiquiti Networks 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 Ubiquiti Networks. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Ubiquiti Networks has no effect on the direction of Enphase Energy i.e., Enphase Energy and Ubiquiti Networks go up and down completely randomly.
Pair Corralation between Enphase Energy and Ubiquiti Networks
Given the investment horizon of 90 days Enphase Energy is expected to under-perform the Ubiquiti Networks. In addition to that, Enphase Energy is 1.04 times more volatile than Ubiquiti Networks. It trades about -0.2 of its total potential returns per unit of risk. Ubiquiti Networks is currently generating about 0.34 per unit of volatility. If you would invest 25,815 in Ubiquiti Networks on August 27, 2024 and sell it today you would earn a total of 10,033 from holding Ubiquiti Networks or generate 38.87% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Significant |
| Accuracy | 100.0% |
| Values | Daily Returns |
Enphase Energy vs. Ubiquiti Networks
Performance |
| Timeline |
| Enphase Energy |
| Ubiquiti Networks |
Enphase Energy and Ubiquiti Networks Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Enphase Energy and Ubiquiti Networks
The main advantage of trading using opposite Enphase Energy and Ubiquiti Networks positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Enphase Energy position performs unexpectedly, Ubiquiti Networks 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 Ubiquiti Networks will offset losses from the drop in Ubiquiti Networks' long position.| Enphase Energy vs. First Solar | Enphase Energy vs. Sunrun Inc | Enphase Energy vs. Canadian Solar | Enphase Energy vs. SolarEdge Technologies |
| Ubiquiti Networks vs. Ichor Holdings | Ubiquiti Networks vs. Fabrinet | Ubiquiti Networks vs. Hello Group | Ubiquiti Networks vs. Ultra Clean 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 Alpha Finder module to use alpha and beta coefficients to find investment opportunities after accounting for the risk.
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