Correlation Between Enphase Energy and Sunworks

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

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

Diversification Opportunities for Enphase Energy and Sunworks

-0.6

Correlation Coefficient

Enphase Energy  Sunworks

Excellent diversification

The 3 months correlation between Enphase and Sunworks is -0.6. Overlapping area represents the amount of risk that can be diversified away by holding Enphase Energy and Sunworks in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Sunworks 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 Sunworks. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Sunworks has no effect on the direction of Enphase Energy i.e., Enphase Energy and Sunworks go up and down completely randomly.

Pair Corralation between Enphase Energy and Sunworks

If you would invest  162.00  in Sunworks on September 16, 2024 and sell it today you would earn a total of  0.00  from holding Sunworks or generate 0.0% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Against
Strength	Weak
Accuracy	1.54%
Values	Daily Returns

Enphase Energy  vs.  Sunworks

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.

Sunworks

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Sunworks has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of fairly stable basic indicators, Sunworks is not utilizing all of its potentials. The recent stock price fuss, may contribute to near-short-term losses for the sophisticated investors.

Pair Trading with Enphase Energy and Sunworks

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

The idea behind Enphase Energy and Sunworks 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 My Watchlist Analysis module to analyze my current watchlist and to refresh optimization strategy. Macroaxis watchlist is based on self-learning algorithm to remember stocks you like.