Correlation Between SolarEdge Technologies and Semtech
Can any of the company-specific risk be diversified away by investing in both SolarEdge Technologies and Semtech 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 Semtech into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between SolarEdge Technologies and Semtech, you can compare the effects of market volatilities on SolarEdge Technologies and Semtech 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 Semtech. Check out your portfolio center. Please also check ongoing floating volatility patterns of SolarEdge Technologies and Semtech.
Diversification Opportunities for SolarEdge Technologies and Semtech
-0.66 | Correlation Coefficient |
Excellent diversification
The 3 months correlation between SolarEdge and Semtech is -0.66. Overlapping area represents the amount of risk that can be diversified away by holding SolarEdge Technologies and Semtech in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Semtech 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 Semtech. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Semtech has no effect on the direction of SolarEdge Technologies i.e., SolarEdge Technologies and Semtech go up and down completely randomly.
Pair Corralation between SolarEdge Technologies and Semtech
Given the investment horizon of 90 days SolarEdge Technologies is expected to under-perform the Semtech. In addition to that, SolarEdge Technologies is 1.39 times more volatile than Semtech. It trades about -0.11 of its total potential returns per unit of risk. Semtech is currently generating about 0.14 per unit of volatility. If you would invest 1,637 in Semtech on August 26, 2024 and sell it today you would earn a total of 3,452 from holding Semtech or generate 210.87% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
SolarEdge Technologies vs. Semtech
Performance |
| Timeline |
| SolarEdge Technologies |
| Semtech |
SolarEdge Technologies and Semtech Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with SolarEdge Technologies and Semtech
The main advantage of trading using opposite SolarEdge Technologies and Semtech positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if SolarEdge Technologies position performs unexpectedly, Semtech 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 Semtech will offset losses from the drop in Semtech's long position.| SolarEdge Technologies vs. First Solar | SolarEdge Technologies vs. Sunrun Inc | SolarEdge Technologies vs. Canadian Solar | SolarEdge Technologies vs. Enphase Energy |
| Semtech vs. Power Integrations | Semtech vs. Diodes Incorporated | Semtech vs. MACOM Technology Solutions | Semtech vs. Cirrus Logic |
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 Correlation Analysis module to reduce portfolio risk simply by holding instruments which are not perfectly correlated.
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