Correlation Between FTC Solar and Sitime
Can any of the company-specific risk be diversified away by investing in both FTC Solar and Sitime 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 Sitime into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between FTC Solar and Sitime, you can compare the effects of market volatilities on FTC Solar and Sitime 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 Sitime. Check out your portfolio center. Please also check ongoing floating volatility patterns of FTC Solar and Sitime.
Diversification Opportunities for FTC Solar and Sitime
Poor diversification
The 3 months correlation between FTC and Sitime is 0.63. Overlapping area represents the amount of risk that can be diversified away by holding FTC Solar and Sitime in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Sitime 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 Sitime. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Sitime has no effect on the direction of FTC Solar i.e., FTC Solar and Sitime go up and down completely randomly.
Pair Corralation between FTC Solar and Sitime
Given the investment horizon of 90 days FTC Solar is expected to generate 1.15 times less return on investment than Sitime. In addition to that, FTC Solar is 3.01 times more volatile than Sitime. It trades about 0.03 of its total potential returns per unit of risk. Sitime is currently generating about 0.12 per unit of volatility. If you would invest 12,945 in Sitime on August 24, 2024 and sell it today you would earn a total of 8,105 from holding Sitime or generate 62.61% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Significant |
| Accuracy | 100.0% |
| Values | Daily Returns |
FTC Solar vs. Sitime
Performance |
| Timeline |
| FTC Solar |
| Sitime |
FTC Solar and Sitime Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with FTC Solar and Sitime
The main advantage of trading using opposite FTC Solar and Sitime positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if FTC Solar position performs unexpectedly, Sitime 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 Sitime will offset losses from the drop in Sitime's 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 |
| Sitime vs. Lattice Semiconductor | Sitime vs. Qorvo Inc | Sitime vs. Microchip Technology | Sitime vs. Silicon Laboratories |
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 Sectors module to list of equity sectors categorizing publicly traded companies based on their primary business activities.
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