Correlation Between FTC Solar and Allegro Microsystems
Can any of the company-specific risk be diversified away by investing in both FTC Solar and Allegro Microsystems 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 FTC Solar and Allegro Microsystems into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between FTC Solar and Allegro Microsystems, you can compare the effects of market volatilities on FTC Solar and Allegro Microsystems 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 FTC Solar with a short position of Allegro Microsystems. Check out your portfolio center. Please also check ongoing floating volatility patterns of FTC Solar and Allegro Microsystems.
Diversification Opportunities for FTC Solar and Allegro Microsystems
-0.25 | Correlation Coefficient |
Very good diversification
The 3 months correlation between FTC and Allegro is -0.25. Overlapping area represents the amount of risk that can be diversified away by holding FTC Solar and Allegro Microsystems in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Allegro Microsystems and FTC Solar 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 FTC Solar are associated (or correlated) with Allegro Microsystems. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Allegro Microsystems has no effect on the direction of FTC Solar i.e., FTC Solar and Allegro Microsystems go up and down completely randomly.
Pair Corralation between FTC Solar and Allegro Microsystems
Given the investment horizon of 90 days FTC Solar is expected to under-perform the Allegro Microsystems. In addition to that, FTC Solar is 2.04 times more volatile than Allegro Microsystems. It trades about -0.07 of its total potential returns per unit of risk. Allegro Microsystems is currently generating about -0.04 per unit of volatility. If you would invest 2,304 in Allegro Microsystems on August 25, 2024 and sell it today you would lose (173.00) from holding Allegro Microsystems or give up 7.51% of portfolio value over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Insignificant |
| Accuracy | 100.0% |
| Values | Daily Returns |
FTC Solar vs. Allegro Microsystems
Performance |
| Timeline |
| FTC Solar |
| Allegro Microsystems |
FTC Solar and Allegro Microsystems Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with FTC Solar and Allegro Microsystems
The main advantage of trading using opposite FTC Solar and Allegro Microsystems positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if FTC Solar position performs unexpectedly, Allegro Microsystems 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 Allegro Microsystems will offset losses from the drop in Allegro Microsystems' long position.| FTC Solar vs. Sunnova Energy International | FTC Solar vs. JinkoSolar Holding | FTC Solar vs. Nextracker Class A | FTC Solar vs. Canadian Solar |
| Allegro Microsystems vs. Teradyne | Allegro Microsystems vs. IPG Photonics | Allegro Microsystems vs. Applied Materials |
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 Aroon Oscillator module to analyze current equity momentum using Aroon Oscillator and other momentum ratios.
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