Correlation Between Teradyne and Enphase Energy
Can any of the company-specific risk be diversified away by investing in both Teradyne and Enphase 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 Teradyne and Enphase Energy into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Teradyne and Enphase Energy, you can compare the effects of market volatilities on Teradyne and Enphase 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 Teradyne with a short position of Enphase Energy. Check out your portfolio center. Please also check ongoing floating volatility patterns of Teradyne and Enphase Energy.
Diversification Opportunities for Teradyne and Enphase Energy
0.81 | Correlation Coefficient |
Very poor diversification
The 3 months correlation between Teradyne and Enphase is 0.81. Overlapping area represents the amount of risk that can be diversified away by holding Teradyne and Enphase Energy in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Enphase Energy and Teradyne 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 Teradyne are associated (or correlated) with Enphase Energy. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Enphase Energy has no effect on the direction of Teradyne i.e., Teradyne and Enphase Energy go up and down completely randomly.
Pair Corralation between Teradyne and Enphase Energy
Assuming the 90 days horizon Teradyne is expected to generate 0.42 times more return on investment than Enphase Energy. However, Teradyne is 2.36 times less risky than Enphase Energy. It trades about 0.02 of its potential returns per unit of risk. Enphase Energy is currently generating about -0.1 per unit of risk. If you would invest 10,160 in Teradyne on August 27, 2024 and sell it today you would earn a total of 54.00 from holding Teradyne or generate 0.53% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Strong |
| Accuracy | 100.0% |
| Values | Daily Returns |
Teradyne vs. Enphase Energy
Performance |
| Timeline |
| Teradyne |
| Enphase Energy |
Teradyne and Enphase Energy Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Teradyne and Enphase Energy
The main advantage of trading using opposite Teradyne and Enphase Energy positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Teradyne position performs unexpectedly, Enphase 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 Enphase Energy will offset losses from the drop in Enphase Energy's long position.| Teradyne vs. ASML HOLDING NY | Teradyne vs. Applied Materials | Teradyne vs. Superior Plus Corp | Teradyne vs. NMI Holdings |
| Enphase Energy vs. SINGAPORE AIRLINES | Enphase Energy vs. Southwest Airlines Co | Enphase Energy vs. International Consolidated Airlines | Enphase Energy vs. United Airlines Holdings |
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 Analyzer module to portfolio analysis module that provides access to portfolio diagnostics and optimization engine.
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