Correlation Between Nextera Energy and Skyworks Solutions
Can any of the company-specific risk be diversified away by investing in both Nextera Energy and Skyworks Solutions 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 Skyworks Solutions into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Nextera Energy and Skyworks Solutions, you can compare the effects of market volatilities on Nextera Energy and Skyworks Solutions 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 Skyworks Solutions. Check out your portfolio center. Please also check ongoing floating volatility patterns of Nextera Energy and Skyworks Solutions.
Diversification Opportunities for Nextera Energy and Skyworks Solutions
0.53 | Correlation Coefficient |
Very weak diversification
The 3 months correlation between Nextera and Skyworks is 0.53. Overlapping area represents the amount of risk that can be diversified away by holding Nextera Energy and Skyworks Solutions in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Skyworks Solutions 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 Skyworks Solutions. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Skyworks Solutions has no effect on the direction of Nextera Energy i.e., Nextera Energy and Skyworks Solutions go up and down completely randomly.
Pair Corralation between Nextera Energy and Skyworks Solutions
Considering the 90-day investment horizon Nextera Energy is expected to generate 0.72 times more return on investment than Skyworks Solutions. However, Nextera Energy is 1.4 times less risky than Skyworks Solutions. It trades about 0.08 of its potential returns per unit of risk. Skyworks Solutions is currently generating about -0.01 per unit of risk. If you would invest 5,685 in Nextera Energy on August 26, 2024 and sell it today you would earn a total of 1,915 from holding Nextera Energy or generate 33.69% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
Nextera Energy vs. Skyworks Solutions
Performance |
| Timeline |
| Nextera Energy |
| Skyworks Solutions |
Nextera Energy and Skyworks Solutions Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Nextera Energy and Skyworks Solutions
The main advantage of trading using opposite Nextera Energy and Skyworks Solutions positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Nextera Energy position performs unexpectedly, Skyworks Solutions 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 Skyworks Solutions will offset losses from the drop in Skyworks Solutions' long position.| Nextera Energy vs. Dominion Energy | Nextera Energy vs. Consolidated Edison | Nextera Energy vs. Eversource Energy | Nextera Energy vs. FirstEnergy |
| Skyworks Solutions vs. Microchip Technology | Skyworks Solutions vs. Lattice Semiconductor | Skyworks Solutions vs. Synaptics Incorporated | Skyworks Solutions vs. NXP Semiconductors NV |
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 Portfolio Manager module to state of the art Portfolio Manager to monitor and improve performance of your invested capital.
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