Correlation Between SolarEdge Technologies and Silicon Laboratories
Can any of the company-specific risk be diversified away by investing in both SolarEdge Technologies and Silicon Laboratories 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 Silicon Laboratories into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between SolarEdge Technologies and Silicon Laboratories, you can compare the effects of market volatilities on SolarEdge Technologies and Silicon Laboratories 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 Silicon Laboratories. Check out your portfolio center. Please also check ongoing floating volatility patterns of SolarEdge Technologies and Silicon Laboratories.
Diversification Opportunities for SolarEdge Technologies and Silicon Laboratories
0.6 | Correlation Coefficient |
Poor diversification
The 3 months correlation between SolarEdge and Silicon is 0.6. Overlapping area represents the amount of risk that can be diversified away by holding SolarEdge Technologies and Silicon Laboratories in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Silicon Laboratories 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 Silicon Laboratories. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Silicon Laboratories has no effect on the direction of SolarEdge Technologies i.e., SolarEdge Technologies and Silicon Laboratories go up and down completely randomly.
Pair Corralation between SolarEdge Technologies and Silicon Laboratories
Given the investment horizon of 90 days SolarEdge Technologies is expected to under-perform the Silicon Laboratories. In addition to that, SolarEdge Technologies is 2.16 times more volatile than Silicon Laboratories. It trades about -0.11 of its total potential returns per unit of risk. Silicon Laboratories is currently generating about -0.02 per unit of volatility. If you would invest 12,364 in Silicon Laboratories on August 30, 2024 and sell it today you would lose (1,486) from holding Silicon Laboratories or give up 12.02% of portfolio value over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Significant |
| Accuracy | 100.0% |
| Values | Daily Returns |
SolarEdge Technologies vs. Silicon Laboratories
Performance |
| Timeline |
| SolarEdge Technologies |
| Silicon Laboratories |
SolarEdge Technologies and Silicon Laboratories Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with SolarEdge Technologies and Silicon Laboratories
The main advantage of trading using opposite SolarEdge Technologies and Silicon Laboratories positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if SolarEdge Technologies position performs unexpectedly, Silicon Laboratories 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 Silicon Laboratories will offset losses from the drop in Silicon Laboratories' long position.| SolarEdge Technologies vs. First Solar | SolarEdge Technologies vs. Sunrun Inc | SolarEdge Technologies vs. Canadian Solar | SolarEdge Technologies vs. Enphase Energy |
| Silicon Laboratories vs. First Solar | Silicon Laboratories vs. Sunrun Inc | Silicon Laboratories vs. Canadian Solar | Silicon Laboratories vs. SolarEdge Technologies |
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 Transaction History module to view history of all your transactions and understand their impact on performance.
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