Correlation Between NextEra Energy and Amkor Technology
Can any of the company-specific risk be diversified away by investing in both NextEra Energy and Amkor Technology 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 NextEra Energy and Amkor Technology into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between NextEra Energy and Amkor Technology, you can compare the effects of market volatilities on NextEra Energy and Amkor Technology 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 NextEra Energy with a short position of Amkor Technology. Check out your portfolio center. Please also check ongoing floating volatility patterns of NextEra Energy and Amkor Technology.
Diversification Opportunities for NextEra Energy and Amkor Technology
0.62 | Correlation Coefficient |
Poor diversification
The 3 months correlation between NextEra and Amkor is 0.62. Overlapping area represents the amount of risk that can be diversified away by holding NextEra Energy and Amkor Technology in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Amkor Technology and NextEra 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 NextEra Energy are associated (or correlated) with Amkor Technology. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Amkor Technology has no effect on the direction of NextEra Energy i.e., NextEra Energy and Amkor Technology go up and down completely randomly.
Pair Corralation between NextEra Energy and Amkor Technology
Assuming the 90 days horizon NextEra Energy is expected to generate 1.13 times less return on investment than Amkor Technology. But when comparing it to its historical volatility, NextEra Energy is 1.37 times less risky than Amkor Technology. It trades about 0.08 of its potential returns per unit of risk. Amkor Technology is currently generating about 0.07 of returns per unit of risk over similar time horizon. If you would invest 2,378 in Amkor Technology on September 5, 2024 and sell it today you would earn a total of 72.00 from holding Amkor Technology or generate 3.03% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Significant |
| Accuracy | 95.65% |
| Values | Daily Returns |
NextEra Energy vs. Amkor Technology
Performance |
| Timeline |
| NextEra Energy |
| Amkor Technology |
NextEra Energy and Amkor Technology Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with NextEra Energy and Amkor Technology
The main advantage of trading using opposite NextEra Energy and Amkor Technology positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if NextEra Energy position performs unexpectedly, Amkor Technology 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 Amkor Technology will offset losses from the drop in Amkor Technology's long position.| NextEra Energy vs. Perseus Mining Limited | NextEra Energy vs. Harmony Gold Mining | NextEra Energy vs. SHIP HEALTHCARE HLDGINC | NextEra Energy vs. Jacquet Metal Service |
| Amkor Technology vs. NVIDIA | Amkor Technology vs. Taiwan Semiconductor Manufacturing | Amkor Technology vs. Advanced Micro Devices |
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 Headlines Timeline module to stay connected to all market stories and filter out noise. Drill down to analyze hype elasticity.
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