Correlation Between Skyworks Solutions and Nextera Energy
Can any of the company-specific risk be diversified away by investing in both Skyworks Solutions and Nextera Energy 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 Skyworks Solutions and Nextera Energy into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Skyworks Solutions and Nextera Energy, you can compare the effects of market volatilities on Skyworks Solutions and Nextera Energy 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 Skyworks Solutions with a short position of Nextera Energy. Check out your portfolio center. Please also check ongoing floating volatility patterns of Skyworks Solutions and Nextera Energy.
Diversification Opportunities for Skyworks Solutions and Nextera Energy
0.53 | Correlation Coefficient |
Very weak diversification
The 3 months correlation between Skyworks and Nextera is 0.53. Overlapping area represents the amount of risk that can be diversified away by holding Skyworks Solutions and Nextera Energy in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Nextera Energy and Skyworks Solutions 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 Skyworks Solutions are associated (or correlated) with Nextera Energy. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Nextera Energy has no effect on the direction of Skyworks Solutions i.e., Skyworks Solutions and Nextera Energy go up and down completely randomly.
Pair Corralation between Skyworks Solutions and Nextera Energy
Given the investment horizon of 90 days Skyworks Solutions is expected to under-perform the Nextera Energy. In addition to that, Skyworks Solutions is 1.48 times more volatile than Nextera Energy. It trades about -0.03 of its total potential returns per unit of risk. Nextera Energy is currently generating about 0.12 per unit of volatility. If you would invest 5,412 in Nextera Energy on August 27, 2024 and sell it today you would earn a total of 2,188 from holding Nextera Energy or generate 40.43% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
Skyworks Solutions vs. Nextera Energy
Performance |
| Timeline |
| Skyworks Solutions |
| Nextera Energy |
Skyworks Solutions and Nextera Energy Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Skyworks Solutions and Nextera Energy
The main advantage of trading using opposite Skyworks Solutions and Nextera Energy positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Skyworks Solutions position performs unexpectedly, Nextera Energy 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 Nextera Energy will offset losses from the drop in Nextera Energy's long position.| Skyworks Solutions vs. Microchip Technology | Skyworks Solutions vs. Lattice Semiconductor | Skyworks Solutions vs. Synaptics Incorporated | Skyworks Solutions vs. NXP Semiconductors NV |
| Nextera Energy vs. Dominion Energy | Nextera Energy vs. Consolidated Edison | Nextera Energy vs. Eversource Energy | Nextera Energy vs. FirstEnergy |
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 Sectors module to list of equity sectors categorizing publicly traded companies based on their primary business activities.
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