Correlation Between Nextracker and SolarEdge Technologies
Can any of the company-specific risk be diversified away by investing in both Nextracker 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 Nextracker and SolarEdge Technologies into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Nextracker Class A and SolarEdge Technologies, you can compare the effects of market volatilities on Nextracker 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 Nextracker with a short position of SolarEdge Technologies. Check out your portfolio center. Please also check ongoing floating volatility patterns of Nextracker and SolarEdge Technologies.
Diversification Opportunities for Nextracker and SolarEdge Technologies
0.06 | Correlation Coefficient |
Significant diversification
The 3 months correlation between Nextracker and SolarEdge is 0.06. Overlapping area represents the amount of risk that can be diversified away by holding Nextracker Class A and SolarEdge Technologies in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on SolarEdge Technologies and Nextracker 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 Nextracker Class A 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 Nextracker i.e., Nextracker and SolarEdge Technologies go up and down completely randomly.
Pair Corralation between Nextracker and SolarEdge Technologies
Considering the 90-day investment horizon Nextracker Class A is expected to generate 0.74 times more return on investment than SolarEdge Technologies. However, Nextracker Class A is 1.36 times less risky than SolarEdge Technologies. It trades about 0.17 of its potential returns per unit of risk. SolarEdge Technologies is currently generating about -0.02 per unit of risk. If you would invest 3,233 in Nextracker Class A on August 30, 2024 and sell it today you would earn a total of 759.00 from holding Nextracker Class A or generate 23.48% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Insignificant |
| Accuracy | 95.65% |
| Values | Daily Returns |
Nextracker Class A vs. SolarEdge Technologies
Performance |
| Timeline |
| Nextracker Class A |
| SolarEdge Technologies |
Nextracker and SolarEdge Technologies Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Nextracker and SolarEdge Technologies
The main advantage of trading using opposite Nextracker and SolarEdge Technologies positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Nextracker 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.| Nextracker vs. Sonida Senior Living | Nextracker vs. Aquestive Therapeutics | Nextracker vs. Alvotech | Nextracker vs. Franklin Wireless Corp |
| SolarEdge Technologies vs. First Solar | SolarEdge Technologies vs. Sunrun Inc | SolarEdge Technologies vs. Canadian Solar | SolarEdge Technologies vs. Enphase Energy |
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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