Correlation Between Enphase Energy and Arteris

Can any of the company-specific risk be diversified away by investing in both Enphase Energy and Arteris 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 Enphase Energy and Arteris into the same portfolio, which is an essential part of the fundamental portfolio management process.

By analyzing existing cross correlation between Enphase Energy and Arteris, you can compare the effects of market volatilities on Enphase Energy and Arteris 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 Enphase Energy with a short position of Arteris. Check out your portfolio center. Please also check ongoing floating volatility patterns of Enphase Energy and Arteris.

Diversification Opportunities for Enphase Energy and Arteris

-0.57

Correlation Coefficient

Enphase Energy  Arteris

Excellent diversification

The 3 months correlation between Enphase and Arteris is -0.57. Overlapping area represents the amount of risk that can be diversified away by holding Enphase Energy and Arteris in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Arteris and Enphase Energy 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 Enphase Energy are associated (or correlated) with Arteris. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Arteris has no effect on the direction of Enphase Energy i.e., Enphase Energy and Arteris go up and down completely randomly.

Pair Corralation between Enphase Energy and Arteris

Given the investment horizon of 90 days Enphase Energy is expected to generate 1.53 times less return on investment than Arteris. In addition to that, Enphase Energy is 1.05 times more volatile than Arteris. It trades about 0.11 of its total potential returns per unit of risk. Arteris is currently generating about 0.17 per unit of volatility. If you would invest  837.00  in Arteris on September 23, 2024 and sell it today you would earn a total of  111.00  from holding Arteris or generate 13.26% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Against
Strength	Very Weak
Accuracy	100.0%
Values	Daily Returns

Enphase Energy  vs.  Arteris

Enphase Energy

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Enphase Energy has generated negative risk-adjusted returns adding no value to investors with long positions. Despite weak performance in the last few months, the Stock's basic indicators remain fairly strong which may send shares a bit higher in January 2025. The recent confusion may also be a sign of long-lasting up-swing for the firm traders.

Arteris

Risk-Adjusted Performance

9 of 100

OK

Compared to the overall equity markets, risk-adjusted returns on investments in Arteris are ranked lower than 9 (%) of all global equities and portfolios over the last 90 days. Even with relatively unsteady forward indicators, Arteris reported solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with Enphase Energy and Arteris

The main advantage of trading using opposite Enphase Energy and Arteris positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Enphase Energy position performs unexpectedly, Arteris 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 Arteris will offset losses from the drop in Arteris' long position.

The idea behind Enphase Energy and Arteris pairs trading is to make the combined position market-neutral, meaning the overall market's direction will not affect its win or loss (or potential downside or upside). This can be achieved by designing a pairs trade with two highly correlated stocks or equities that operate in a similar space or sector, making it possible to obtain profits through simple and relatively low-risk investment.

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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 Price Transformation module to use Price Transformation models to analyze the depth of different equity instruments across global markets.