Correlation Between SolarEdge Technologies and CVD Equipment
Can any of the company-specific risk be diversified away by investing in both SolarEdge Technologies and CVD Equipment 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 SolarEdge Technologies and CVD Equipment into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between SolarEdge Technologies and CVD Equipment, you can compare the effects of market volatilities on SolarEdge Technologies and CVD Equipment 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 SolarEdge Technologies with a short position of CVD Equipment. Check out your portfolio center. Please also check ongoing floating volatility patterns of SolarEdge Technologies and CVD Equipment.
Diversification Opportunities for SolarEdge Technologies and CVD Equipment
0.72 | Correlation Coefficient |
Poor diversification
The 3 months correlation between SolarEdge and CVD is 0.72. Overlapping area represents the amount of risk that can be diversified away by holding SolarEdge Technologies and CVD Equipment in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on CVD Equipment and SolarEdge Technologies 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 SolarEdge Technologies are associated (or correlated) with CVD Equipment. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of CVD Equipment has no effect on the direction of SolarEdge Technologies i.e., SolarEdge Technologies and CVD Equipment go up and down completely randomly.
Pair Corralation between SolarEdge Technologies and CVD Equipment
Given the investment horizon of 90 days SolarEdge Technologies is expected to under-perform the CVD Equipment. In addition to that, SolarEdge Technologies is 1.86 times more volatile than CVD Equipment. It trades about -0.02 of its total potential returns per unit of risk. CVD Equipment is currently generating about 0.1 per unit of volatility. If you would invest 295.00 in CVD Equipment on September 2, 2024 and sell it today you would earn a total of 24.00 from holding CVD Equipment or generate 8.14% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Significant |
| Accuracy | 100.0% |
| Values | Daily Returns |
SolarEdge Technologies vs. CVD Equipment
Performance |
| Timeline |
| SolarEdge Technologies |
| CVD Equipment |
SolarEdge Technologies and CVD Equipment Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with SolarEdge Technologies and CVD Equipment
The main advantage of trading using opposite SolarEdge Technologies and CVD Equipment positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if SolarEdge Technologies position performs unexpectedly, CVD Equipment 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 CVD Equipment will offset losses from the drop in CVD Equipment's long position.| SolarEdge Technologies vs. First Solar | SolarEdge Technologies vs. Sunrun Inc | SolarEdge Technologies vs. Canadian Solar | SolarEdge Technologies vs. Enphase Energy |
| CVD Equipment vs. NXP Semiconductors NV | CVD Equipment vs. GSI Technology | CVD Equipment vs. MaxLinear | CVD Equipment vs. Texas Instruments Incorporated |
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 Backtesting module to avoid under-diversification and over-optimization by backtesting your portfolios.
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