Correlation Between Enphase Energy and Wolfspeed
Can any of the company-specific risk be diversified away by investing in both Enphase Energy and Wolfspeed 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 Wolfspeed into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Enphase Energy and Wolfspeed, you can compare the effects of market volatilities on Enphase Energy and Wolfspeed 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 Wolfspeed. Check out your portfolio center. Please also check ongoing floating volatility patterns of Enphase Energy and Wolfspeed.
Diversification Opportunities for Enphase Energy and Wolfspeed
0.2 | Correlation Coefficient |
Modest diversification
The 3 months correlation between Enphase and Wolfspeed is 0.2. Overlapping area represents the amount of risk that can be diversified away by holding Enphase Energy and Wolfspeed in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Wolfspeed 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 Wolfspeed. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Wolfspeed has no effect on the direction of Enphase Energy i.e., Enphase Energy and Wolfspeed go up and down completely randomly.
Pair Corralation between Enphase Energy and Wolfspeed
Given the investment horizon of 90 days Enphase Energy is expected to under-perform the Wolfspeed. But the stock apears to be less risky and, when comparing its historical volatility, Enphase Energy is 2.27 times less risky than Wolfspeed. The stock trades about -0.13 of its potential returns per unit of risk. The Wolfspeed is currently generating about 0.05 of returns per unit of risk over similar time horizon. If you would invest 789.00 in Wolfspeed on September 25, 2024 and sell it today you would lose (14.00) from holding Wolfspeed or give up 1.77% of portfolio value over 90 days.
Time Period | 3 Months [change] |
Direction | Moves Together |
Strength | Very Weak |
Accuracy | 100.0% |
Values | Daily Returns |
Enphase Energy vs. Wolfspeed
Performance |
Timeline |
Enphase Energy |
Wolfspeed |
Enphase Energy and Wolfspeed Volatility Contrast
Predicted Return Density |
Returns |
Pair Trading with Enphase Energy and Wolfspeed
The main advantage of trading using opposite Enphase Energy and Wolfspeed positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Enphase Energy position performs unexpectedly, Wolfspeed 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 Wolfspeed will offset losses from the drop in Wolfspeed's long position.Enphase Energy vs. First Solar | Enphase Energy vs. Sunrun Inc | Enphase Energy vs. Canadian Solar | Enphase Energy vs. SolarEdge Technologies |
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 Price Transformation module to use Price Transformation models to analyze the depth of different equity instruments across global markets.
Other Complementary Tools
Portfolio Center All portfolio management and optimization tools to improve performance of your portfolios | |
Portfolio Dashboard Portfolio dashboard that provides centralized access to all your investments | |
Technical Analysis Check basic technical indicators and analysis based on most latest market data | |
Aroon Oscillator Analyze current equity momentum using Aroon Oscillator and other momentum ratios | |
FinTech Suite Use AI to screen and filter profitable investment opportunities |