Correlation Between FTC Solar and SolarEdge Technologies
Can any of the company-specific risk be diversified away by investing in both FTC Solar and SolarEdge Technologies 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 SolarEdge Technologies into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between FTC Solar and SolarEdge Technologies, you can compare the effects of market volatilities on FTC Solar and SolarEdge Technologies 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 SolarEdge Technologies. Check out your portfolio center. Please also check ongoing floating volatility patterns of FTC Solar and SolarEdge Technologies.
Diversification Opportunities for FTC Solar and SolarEdge Technologies
-0.4 | Correlation Coefficient |
Very good diversification
The 3 months correlation between FTC and SolarEdge is -0.4. Overlapping area represents the amount of risk that can be diversified away by holding FTC Solar and SolarEdge Technologies in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on SolarEdge Technologies 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 SolarEdge Technologies. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of SolarEdge Technologies has no effect on the direction of FTC Solar i.e., FTC Solar and SolarEdge Technologies go up and down completely randomly.
Pair Corralation between FTC Solar and SolarEdge Technologies
Given the investment horizon of 90 days FTC Solar is expected to generate 0.67 times more return on investment than SolarEdge Technologies. However, FTC Solar is 1.5 times less risky than SolarEdge Technologies. It trades about -0.33 of its potential returns per unit of risk. SolarEdge Technologies is currently generating about -0.23 per unit of risk. If you would invest 63.00 in FTC Solar on August 23, 2024 and sell it today you would lose (22.00) from holding FTC Solar or give up 34.92% of portfolio value over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Very Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
FTC Solar vs. SolarEdge Technologies
Performance |
| Timeline |
| FTC Solar |
| SolarEdge Technologies |
FTC Solar and SolarEdge Technologies Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with FTC Solar and SolarEdge Technologies
The main advantage of trading using opposite FTC Solar and SolarEdge Technologies positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if FTC Solar position performs unexpectedly, SolarEdge Technologies 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 SolarEdge Technologies will offset losses from the drop in SolarEdge Technologies' long position.| FTC Solar vs. Small Cap Core | FTC Solar vs. Freedom Holding Corp | FTC Solar vs. Gfl Environmental Holdings | FTC Solar vs. Growth Fund Of |
| SolarEdge Technologies vs. Small Cap Core | SolarEdge Technologies vs. Freedom Holding Corp | SolarEdge Technologies vs. Gfl Environmental Holdings | SolarEdge Technologies vs. Growth Fund Of |
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 ETF Categories module to list of ETF categories grouped based on various criteria, such as the investment strategy or type of investments.
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